Even as global iron ore prices have shown some upturn in recent times, state-run NMDC has decided not to increase the rates for the current month due to sluggish demand from domestic steelmakers.
The country’s largest miner of the key steel-making raw material has decided to move ahead with the existing prices of R3,050 per tonne for lumps and R1,960 a tonne for fines for May, a senior government official said.
“There is no doubt that the international prices of iron ore have started firming up and in sync with that NMDC could have tweaked its prices a little. But, there is not enough appetite from the domestic steelmakers for iron ore which is why it decided to roll over the prices of the last month,” he said.
Deviating from its 30-month- old practice of revisiting prices at the beginning of the month, NMDC had in April pruned the prices of the raw material by up to 20% mid-month even as its pricing committee earlier decided to maintain status quo. In February and March, NMDC had slashed the prices cumulatively by R950 per tonne for lumps and R600 a tonne for fines.
However, the official said there would not be any tweaking in the prices of the raw material this month.
Iron ore prices have shown some improvement in May after trading at a decade-low of $46.7 per tonne towards the beginning of the last month. However, prices have recovered since then to trade at around $56 per tonne.
Since bankers are predicting that the prices of the raw material would likely to hover in the current rates for the remaining period of the year and the next before inching up to $60 a tonne in 2017, NMDC might upwardly revise the prices as and when demands from the domestic steelmakers pick up.
“Demand for iron ore from the domestic steelmakers were not on the expected lines in April and hence, we decided against the price hike even the current international prices give us some elbowroom. However, demand is likely to improve in the coming months, which would hopefully help us revisit the prices,” said a senior company official.