NMDC may raise iron ore prices by 3%

State-run NMDC is likely to raise iron ore prices by three per cent next week for the January-March quarter, a move which could prompt domestic steel makers like JSW and Tata Steel to increase prices in the New Year.

“NMDC may increase prices of iron ore by three per cent from January,” an official of the company said on conditions of anonymity. The official added that “the move is due to a rise in demand and squeeze in global supplies”.

When contacted, NMDC Chairman and Managing Director Rana Som said the prices would be decided by the pricing committee next week.

“The pricing committee will take a final decision on iron ore prices. It is meeting in Hyderabad on December 29 to decide the prices, which are fixed quarterly,” Som said. After a series of hikes in iron ore prices during the first half of 2010, NMDC had reduced prices by about five per cent for the October-December quarter.

Earlier, the company had raised ore prices by about 90 per cent for the April-June quarter to touch between $120 and $135 a tonne. In the subsequent quarter (July-September), prices were raised to about $145 a tonne.

Steel industry sources said the rise would affect all steel companies and these would be forced to increase their prices as well.

Official comments from major steel producers like JSW, Essar and Tata Steel could not be obtained. SAIL, the largest domestic steel producer, is unlikely to be impacted by this rise, as it meets its requirements through captive ore reserves.

NMDC, which produced 24 million tonnes of iron ore last year, exports about three million tonnes per annum to Japanese and Korean steel mills at prices which form the benchmark rate for domestic consumers.

The scrips of the company had closed at Rs 263.30 a piece on Friday at the Bombay Stock Exchange, up 0.11 per cent from the previous close.