State-run NMDC, which had cut the price of iron ore in the previous two months, has decided not to reduce prices...
State-run NMDC, which had cut the price of iron ore in the previous two months, has decided not to reduce prices of the mineral in April, hoping a spike in demand from domestic steelmakers.
The iron ore miner, which reviews prices every month depending upon the demand-supply scenario and prevailing prices in markets other than Karnataka and Chhattisgarh where it is the dominant player, had in the last two months slashed the cost of lumps and fines by R950 a tonne and R600 a tonne, respectively on weak demands and softening global rates.
NMDC was selling lump ores, which has higher iron content, at R3,250 a tonne and fines, which contains less iron, at R2,460 per tonne in March.
“There has been no change in the price for the current month,” a senior NMDC official told FE without citing any reason.
Domestic steelmakers, however, were hoping for a third consecutive rate cut in as many months as the price of the key steel-making raw material nosedived to its decade-low last week to $47 a tonne globally mainly due to a supply glut and subdued demand from China, the largest consumer of the raw material in the world.
“NMDC should have effected the third cut at least for fines. Globally, prices have fallen once again. It should have been reflected in the prices of NMDC,” a west-coast based steelmaker said on condition of anonymity.
The idea of retaining the price might have stemmed from the hope that the demand for the raw material would pick up, said an industry analyst.
Compared to April last year, NMDC’s prices are lower by R1,250 per tonne for lumps and R450 a tonne for fines. It lowered the price for lumps by R200 in May keeping fines prices unchanged. In June, however, NMDC raised the price for both lumps and fines to R4,600 per tonne and to R3,160 a tonne respectively. For the next four months, it did not tweak the prices.
In November, it lowered the price of lumps by R200 per tonne but maintain status quo for fines. Again in December, there was a R200 per tonne cut for lumps and R100 a tonne for fines. The company retained the price in January.
The stiff cut in the prices for the two months in a row of the January-March quarter of 2014-15 might cause a huge impact on NMDC’s realisation leading to a squeezed bottom-line. Sources said NMDC’s production and sales remained nearly flat in 2014-15 compared to a year earlier to stand at around 31 MT and 30.5 MT respectively. NMDC is yet to make the numbers public.
Caught in a double whammy of galloping imports and subdued domestic consumption, the Indian steelmakers are passing through a rough weather. Steel imports to India grew by a whopping 71% while consumption grew by 3.1% last fiscal over the previous fiscal.