Improved mining output data fails to cheer Orissa metal stocks

Share prices of many metal and mining companies operating in Orissa declined on Thursday in the stock exchanges, despite improvement in mining sector output data.

The latest Index of Industrial Production (IIP) data showed India’s mining sector output in November fell by 4.4 per cent, against 7.2 per cent contraction recorded in October.

The shrinking of negative growth was welcomed by most metal stocks as Bombay Stock Exchange (BSE) Metal index climbed by over one per cent on Thursday. But stocks of Indian Metal and Ferro Alloys (IMFA), Orissa Mineral Development Company (OMDC) and Adhunik Metaliks declined due to continued concern over mining and demand.

IMFA shares plunged by 3.8 per cent, OMDC fell 2.08 per cent , while Adhunik Metaliks stocks finished 1.8 per cent lower than Wednesday. These companies have interest in chromite, iron and manganese ore mining in Orissa.

The share prices dropped as investors were expecting fall in October-December quarterly performance, a city-based stock broker said.

Transportation of minerals in Orissa has been halted since late October as the government did not issue any transit passes. Mineral excavation business also took a hit in the same period due to the transport blockade as huge stacks of ore at the mining sites affected production and storage.

Meanwhile, production of sponge iron in the state, highest in the country, has declined sharply due to weak demand from real estate sector, already reeling under high interest rate and cement prices.

About 80 per cent of Orissa sponge iron industry contributes to TMT bar production used for constructions. The state exports iron ore fines, chromite and managese ores, which are used to produce other varieties of steel.

“Steel prices have been stagnant for past few months due to lower production and weak demand. And I do not think the demand scenario will change soon. The metal stocks, except aluminium and copper, will be under pressure till February,” said Aurobindo Prasad, metal analyst at Karvy Comtrade.

Share prices of National Aluminium Company (Nalco) went up 0.7 per cent on better global demand, he said.