NMDC cuts iron ore price by up to 10%

Steel mills seek narrow down price differential among various grades

Government-owned mining company NMDC has cut the prices of iron ore lumps by up to 10 per cent, effective this Tuesday, despite a global rebound in the price.

With this, the highest grade (calibrated) ore is Rs 3,440 a tonne, a decline of Rs 400 or 10 per cent from its earlier Rs 3,840 a tonne. The price of the most popular grade has been revised by a marginal 3.4 per cent or Rs 100 to Rs 2,850 a tonne. The company kept prices of fines unchanged at Rs 1,660 a tonne.

The small revision in the popular grade has irked steel companies; they were waiting for a cut in ore prices. The most striking factor in the pricing is the premium over low and high grades.
 

“Today, there is hardly any premium between lumps and fines globally. With lumps priced at Rs 2,860 a tonne, fines price at Rs 1,660 a tonne has no justification. NMDC should reduce the gap, in sync with global markets. Even with this price cut, import is cheaper. Therefore, we are looking to increase our quantity of imports,” said Seshagiri Rao, group chief financial officer, JSW Steel.

Over this price, steel mills will have to pay royalty, taxes, duties and levies. In Odisha, private mining companies have reduced iron ore prices to Rs 250-300 a tonne even of fines for loading to wagons. So, royalty, taxes and levies are paid by the mining companies. By contrast, steel mills will have to pay royalty, taxes and other levies if they procure ore from NMDC.

NMDC had earlier revised its iron ore price on July 4. Since then, prices in global markets have seen sharp volatility. After a recent low of $44.59 a tonne on July 8, ore lumps shot up to $57 a tonne on August 13. It was quoted at $56.50 a tonne on Friday at Chinese ports.

Faced with such high quotes by NMDC, the largest merchant iron ore miner, Indian steel mills have been importing ore from the world over. "This price cut would not offer any relief,” said a senior executive of a private mill.

Iron ore imports into India hit a record 15.5 million tonnes in 2014-15, from a a mere 320,000 tonnes the previous financial year.