Pressure is mounting on NMDC, the central government-owned iron ore mining company, to reduce prices of the key steel-making raw material.
All major private miners cut prices by Rs 800-1,000 a tonne over the past month. NMDC extended its December prices for January, though international prices have also been falling.
NMDC reviews its price every month. The price fixation committee of its board of directors is scheduled to meet on Monday or Tuesday to decide on those for February, sources said.
Ore prices were at a five and a half year low of $63 a tonne (for 62 per cent iron content) in the international market earlier this week.
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A large number of buyers, including JSW Steel and Kalyani Steel, which source a majority of their requirement from NMDC in Karnataka, have made a representation to the company’s board to reduce prices in line with the international trend, aligning with other private producers in the eastern sector.
Currently, NMDC sells iron ore fines at Rs 3,060 a tonne and lumps at Rs 4,200 a tonne, 20-30 per cent higher than the private players. The price of fines have been falling for three months. Private miners have cut to Rs 2,400-2,500 a tonne from Rs 3,650 a tonne, including royalty and taxes, for fines with 63 per cent iron content, a drop of 30 per cent since November 2014.
As for lumps, Rungta Mines cut prices by Rs 1,000 a tonne from Rs 7,000 a tonne about a month earlier. Mining companies in Odisha are likely to reduce prices by another Rs 500 a tonne from February.
“Chinese steel makers are continuously dumping in India. The demand for steel products is very low in the domestic market. With the current prices of NMDC, almost 40 per cent higher than private miners, it is very difficult for us to survive,” said Arun Maheshwari, senior vice-president, commercial, JSW Steel.
“NMDC is not even ready to reduce prices in (the mining states of) Karnataka and Chhattisgarh. They should go by the prevailing international trends,” said Maheshwari.
JSW, he said, had stopped procuring ore from the eastern sector for its plants in Dolvi (Maharashtra) and Salem (Tamil Nadu) for the past six months. “We are using imported ore for these plants and if NMDC continues its price trend, we might have to increase our imports,” he said.
“NMDC is unlikely to cut prices by more than Rs 200 a tonne for February. It might not reduce prices of fines, as there is huge demand for their material in both Karnataka and the eastern sector,” said Prakash Duvvuri, head of research, OreTeam Research, a Delhi-based firm tracking the market.