NMDC under pressure to cut iron ore prices for April

Government-owned miner NMDC might cut iron ore prices by Rs 500-700 a tonne for the month of April, to align prices of the steelmaking raw material in India and abroad.

For March, NMDC had cut these prices by a mere Rs 100 a tonne across both lumps and fines, to Rs 3,000 a tonne and Rs 2,660 a tonne, respectively. It had raised prices substantially after a Supreme Court order to shut mines in Odisha with annual capacity of 25 million tonnes. This resulted in a supply shortage.

Since then, a majority of these Odisha mines have recommenced operations, easing the supply. Private miners in Odisha that had raised prices in January have started cutting these.

“In March alone, private iron ore miners cut by Rs 800-1,000 a tonne, following increase in its supply across the country. So, NMDC might cut for April by at least Rs 500-700 a tonne,” said Vijay Jhawar, president, Chhattisgarh Sponge Iron Manufacturers Association.

According to trade sources, the difference in ore prices between private miners and NMDC is currently Rs 850 a tonne.

Prices in March also declined substantially in global markets. The benchmark 62 Fe fine (62 per cent iron content) slumped 18 per cent to $62.25 a tonne, on sudden increase in supply.

“The pricing policy of NMDC continues to be a matter of concern for Indian steel, including sponge iron manufacturers which are dependent on this government-owned company for iron ore,” said a senior industry official.

The existing ore price also faces pressure from steel pellets, traded currently at Rs 5,000 a tonne in the Durgapur and Jamshedpur area. Prices of pellets fell around Rs 1,000 a tonne in March.

“Hence, a cut in iron ore prices would help NMDC sell to steel makers. Otherwise, steel mills would intensify iron ore import,” said Jhawar.

Also, the steel ministry had asked NMDC to raise iron ore output to 67 million tonnes annually by 2021-22. According to industry sources, NMDC has started increasing its production.

“So, NMDC needs to cut iron ore prices. This will also keep pressure on steel mills to cut prices or at least hold on to price increases,” said a senior official at one of the large steel company. Steel mills had, with a rise in demand for their products, been raising their prices, citing a rise in cost of production, among other reasons.

Source: BUSINESS STANDARD