Falling global prices and subdued demand may prompt country's largest iron ore miner NMDC to cut the price of steel-making raw material for the second month in a row in December.
"When the prices are falling in international markets, is there any scope for the state-run firm to hike the price? We may have to reduce the price in December, though the quantum of the cut will be decided later," a company source said.
NMDC had reduced the rate of lumps, which has higher iron content, by Rs 200 per tonne for November to Rs 4,400 a tonne, after holding the price for previous four months.
The company, however, rolled over the October price for fines, the inferior grade of the raw material, now stands at Rs 3,16o per tonne.
The possible reduction in the price of iron ore is likely to happen because of two major reasons - subdued demand in the domestic market and nosediving international prices of the raw material. The root cause of the two are incidentally the same.
Even as the rate of growth in domestic steel production has gone up in the recent months, barring a few having captive mines, major producers have started importing the raw material to cash on the subdued price, which is now hovering around USD 70 a tonne.
NMDC's sales also dipped in October compared to the last month. Compared to September, crude steel production declined by 0.5 per cent in October, 2014 mainly by decline of 0.9 per cent in case of major producers and a 0.1 per cent decline in production by mini and other producers.
The official said the possible price cut would have an impact on the realisation of the company for current quarter.
NMDC's net profit fell during the July-September quarter to Rs 1,567 crore compared to Rs 1,915 crore in the immediate past quarter.
NMDC, which reviews prices every month going by domestic demand, had not tweaked rates for four months starting from July.
The company has sold 17.65 million tonnes iron ore during the April-October period and plans to raise it to around 32 MT in the current fiscal.
