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NMDC to fix iron ore prices monthly

The state-run NMDC has decided to cut iron ore price by up to 11% for October, a development that will benefit steel producers. Deviating from its earlier practice of fixing price for three-month period, the country’s largest iron ore maker in its board meeting today also decided to set the price on monthly basis.

The move may be attributed to the shrinking price of iron ore globally following a slump in demand from China, which produces around half of world’s steel.

“We have taken two important decisions today. First, from henceforth, price will be determined on monthly basis. We have also decided to lower the prices by 2-11% depending on the variety of iron ore,” C S Verma, Chairman, NMDC said following the company’s board meeting.

Domestic steel firms had in recent times accused NMDC of charging higher prices for the domestic firms, while exporting at lower rates. RINL has also recently wrote to the Steel Ministry to impress upon NMDC to bring down prices anticipating its bottom line to be severely affected during the second quarter of the current fiscal due to sharp increase in the price of iron ore, mostly supplied by NMDC.

NMDC had in August announced a hike in the contract price of iron ore by 8-13% for the July-September period to cash in on demand-supply mismatch scenario in the market. During the April-June quarter also, it had raised the price by 8-10%.

Following the hike in August, price of lumps with 65% iron content has gone up to Rs 6,100 a tonne and up to Rs 3,000 a tonne for fines containing lesser iron. Indian steel mills mostly use lumps. NMDC has over 40% share of the domestic market. JSW Steel and Essar Steel are NMDC’s leading customers in the country.

NMDC had been cashing in on the subdued supply situation in the domestic market as a ban on mining in Karnataka for over a year now and the closure of some mines in Goa, Odisha and Jharkhand has impacted iron ore production.

Total domestic production has come down to 169 million tonnes last fiscal. The industry body FIMI expects it to reduce further to 140 million tonnes in the current financial year.

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