With its offtake dipping over 30% in October-November, state-run mining giant NMDC is now looking at expanding its customer base to supply surplus iron ore to secondary steel producers.
"We may have about a million tonne of surplus iron ore, which could be given to secondary steel producers and pig iron manufacturers on long-term contracts in next three months," NMDC Chairman and Managing Director Rana Som told PTI.
The Navratna PSU has also asked domestic buyers such as Essar Steel, RINL, JSW Steel and Ispat Industries, to honour their long-term commitments of lifting at least 90% of the earmarked iron ore, he added.
Owing to waning demand for steel amid the global economic slowdown, large steel producers resorted to production cuts from October onwards that resulted in low offtake of iron ore, a vital raw material for steel making, from NMDC.
Pointing out another vital reason for reduction in iron ore offtake by the industry, an official of a leading steel company said it is because the price being offered by the PSU for supply of the raw material is higher.
"Given the current phase wherein steel producers have reduced output and prices have crashed, it is not possible for them to pay higher price for iron ore," he said.
In a blow to domestic steel industry, NMDC had in October increased iron ore prices by up to 40% with retrospective effect from April 1, 2008.
However, following representations from steel companies, the PSU reduced iron ore prices by 25% from December 1, but the industry wants the reduction to be made effective retrospectively from April 1.
Of its annual 30 million tonnes of iron ore production, NMDC exports 3.5 million tonnes. The rest is supplied to domestic steel firms under long-term contracts.
