 "Iron ore prices surge to 4-year high at Odisha auction")
Rates of iron ore went up sharply in a price discovery auction conducted by Odisha Mining Corporation (OMC) earlier this month, causing anxiety among traders.
OMC conducts auction for iron ore every three months to discover the price at which steel makers having no captive mines buy from it. In the price setting auction conducted last week, Electrosteel Steels Ltd, a Kolkata-based firm, had quoted Rs 5,100 per tonne for high-grade sized iron ore, surpassing previous highest quote of Rs 4,455 per tonne in 2010-11.
The quoted price is nearly 45 per cent more than the highest selling price of Rs 3,526 per tonne in the previous quarter (July-September) and 62 per cent higher than the benchmark price in the quarter before that (April-June).
“Participants such as Electrosteel, which mentions on its website about having own coal and iron ore mines in Jharkhand, are barred from participating in OMC auction. But surprisingly, OMC allowed it to take part. The speculative price quoted by the Kolkata-based firm resulted in sharp rise in the benchmark rate for other iron ore buyers,” said Ranjan Mishra, a senior official of Visa Steel, a regular participant in the OMC auction.
Steel makers having access to captive raw material facility can afford to quote astronomical prices when they have problems in obtaining raw material from their own sites, he added.
The auction participants have demanded that since the price quoted by Electrosteel is invalid, the second highest bid price of Rs 3,800 per tonne should be considered as the benchmark price for October-December quarter.
OMC officials said they are looking into the allegations made against the company.
“We have asked the mines department of Jharkhand government to clarify the position of captive iron ore mine of Electrosteel and till then the company will not be allowed to lift iron ore from us. We have also sent officers to inspect the plant of the company in question,” said an official of OMC involved in the process.
The mining agency said there was no plan to cancel the bid price quoted by the company, as one buyer has already been allotted iron ore at the said price.
“Neelachal Ispat has already been issued some quantity of iron ore at Rs 5,100 per tonne, so there is no question of rolling back the price. We might go for another auction if we feel the need for it,” the official said.
OMC conducts auction for iron ore every three months to discover the price at which steel makers having no captive mines buy from it. In the price setting auction conducted last week, Electrosteel Steels Ltd, a Kolkata-based firm, had quoted Rs 5,100 per tonne for high-grade sized iron ore, surpassing previous highest quote of Rs 4,455 per tonne in 2010-11.
The quoted price is nearly 45 per cent more than the highest selling price of Rs 3,526 per tonne in the previous quarter (July-September) and 62 per cent higher than the benchmark price in the quarter before that (April-June).
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According to the auction rule, the highest quoted price is the benchmark rate for that particular quarter and all buyers have to procure the raw material at this price. Local steel producers alleged that OMC violated its own rule by allowing Electrosteel to participate in the auction, as the company already had a captive iron ore mine. They demanded cancellation of the auction.
“Participants such as Electrosteel, which mentions on its website about having own coal and iron ore mines in Jharkhand, are barred from participating in OMC auction. But surprisingly, OMC allowed it to take part. The speculative price quoted by the Kolkata-based firm resulted in sharp rise in the benchmark rate for other iron ore buyers,” said Ranjan Mishra, a senior official of Visa Steel, a regular participant in the OMC auction.
Steel makers having access to captive raw material facility can afford to quote astronomical prices when they have problems in obtaining raw material from their own sites, he added.
The auction participants have demanded that since the price quoted by Electrosteel is invalid, the second highest bid price of Rs 3,800 per tonne should be considered as the benchmark price for October-December quarter.
OMC officials said they are looking into the allegations made against the company.
“We have asked the mines department of Jharkhand government to clarify the position of captive iron ore mine of Electrosteel and till then the company will not be allowed to lift iron ore from us. We have also sent officers to inspect the plant of the company in question,” said an official of OMC involved in the process.
The mining agency said there was no plan to cancel the bid price quoted by the company, as one buyer has already been allotted iron ore at the said price.
“Neelachal Ispat has already been issued some quantity of iron ore at Rs 5,100 per tonne, so there is no question of rolling back the price. We might go for another auction if we feel the need for it,” the official said.