NMDC cuts iron ore price by 12.5%

Move follows lack of demand, as plummeting freight rates prompt domestic steel mills to import rather than buy from NMDC

Public sector miner NMDC Ltd has cut iron ore prices by 12.5 per cent with immediate effect on a sharp decline in its demand from steel mills.

In a BSE filing, NMDC said that its latest iron ore lump price has been revised at Rs 2,100 a tonne, a decline of Rs 300 from its previous revision at Rs 2,400 a tonne on November 3. But, prices of iron ore fine have been kept unchanged at Rs 1,560 a tonne. In the last one year, NMDC has cut iron ore prices by over 50 per cent.

An NMDC official said the move was on account of lack of demand for ore. In fact, iron ore prices have fallen sharply in the last one year in global markets. Because of a sharp decline in freight rates, domestic steel mills are prompted to prefer import to purchase from NMDC.

Domestic steel mills had urged NMDC to cut its iron ore prices in line with the fall in international markets. Globally, iron ore prices have declined by 22 per cent but, the freight rate (Baltic Dry Index) has nosedived by 53 per cent so far this year.

The company had has set a target of almost doubling the mining capacity to 75 million tonnes in the next two years compared with the current capacity 34 million tonnes. Its production stood at 30.4 million tonne in the last financial year

The cut in the prices of the steelmaking raw material comes at a time when steel mills are struggling to maintain their margins due to weak domestic demand. Steel mills in India have posted a sharp decline in their profitability in the last few quarters