Cheaper iron ore available both within and outside the country coupled with lower demand and resultant poor sales compelled state-run miner NMDC to deviate from its 30-month old practice of reviewing prices in the first week of a month to effect a correction mid-month.
Following the mid-month price cut by up to 20%, NMDC’s lumps are now available at R3,050 per tonne and fines at R1,960 a tonne.
NMDC switched from quarterly pricing to a monthly system in October 2012 primarily to isolate itself from the vagaries of rates internationally.
The move has paid dividend.
The company revises its monthly prices depending upon the prevailing demand-supply scenario in a particular month. It refrained from tweaking the rates in the beginning of the current month after slashing them for two consecutive months cumulatively about 950 per tonne for lumps and by R600 a tonne for fines.
However, pressure to slash rates kept on mounting. An industry body recently wrote to steel and mines minister Narendra Singh Tomar alleging that NMDC was charging 25% more than the miners in Odisha. The company was forced to take a re-look at its initial decision since its sales remained largely flat in 2014-15 compared to the previous fiscal.
Trigger was there from beyond the boundary also. Internationally, the prices of the raw material have nosedived to its decade-low of $47 a tonne in recent time largely due to higher supply and subdued demand of the raw material from China, the largest consumer of iron ore and producer of steel.
This enticed many domestic firms including state-run steel-maker Rashtirya Ispat Nigam (RINL) to look out for imports. One of its biggest customers JSW Steel has already imported around 10 million tonne. Tata Steel also resorted to importing though the reason was different.
“This is definitely a welcome step. This will go a long way in enhancing competitiveness of Indian steel and Indian pellets industries. It will reduce the imports of iron ore into the country saving foreign exchange, reduce pressure on domestic miners and avoid congestion at the ports” said Dilip Oommen, CEO & MD, Essar Steel. Essar Steel buys nearly 8 million tonne fines from NMDC
“We have no complaints now. The landed price of the iron ore vis-a-vis NMDC’s price is almost the same now. There is hardly any difference between NMDC’s price and the price being quoted by the Odisha miners. We are happy,” said a senior official in another private sector steel firm preferring not to be quoted.