 "NMDC cuts iron ore price by 12% for October")
In a major respite for steel producers, government-owned NMDC Ltd has cut iron ore prices by 12 per cent for October. This is the second consecutive reduction after a marginal cut of 3 per cent announced in certain categories in September.
With this the prices of iron ore lumps are quoted at Rs 2,500 a tonne and fines at Rs 1,460 a tonne for October from their respective levels of Rs 2,850 a tonne and Rs 1,660 a tonne for September. The new price is effective October 2.
The cut in the prices of the steelmaking raw material came at a time when steel mills are struggling to maintain their margins due to weak domestic demand. Steel mills in India have posted a sharp decline in their profitability in the last few quarters and even the recently ended July - September quarter is likely to remain no different. But, the iron ore price cut would help improve margins of steel makers.
"Normally, steel price in India moves in tandem with global markets. Hence, steel price is cut ahead of iron ore prices. Needless to say, NMDC does not follow the iron ore price movement in global markets for taking its own price decisions. NMDC often follows domestic demand trend before deciding on iron ore prices. Since, iron ore prices in global markets declined drastically and its import also rose sharply, NMDC cut its product prices," said Giriraj Daga, Portfolio Manager, SKS Capital & Research.
With this iron ore prices have see a sharp decline of 52 per cent so far this year. In January, iron ore fine was trading at Rs 3,060 a tonne facing subdued demand trend.
The price of the higher grade iron ore (lumps) has been reduced by 41 per cent to Rs 2,500 per tonne for October 2015 compared to Rs 4,200 a tonne in January this year.