NMDC's price cut cheers steel mills

As many as 25 buyers including large steel mills are bidding for 1.5 million metric tons of iron ore at Friday's e-auctions in Karnataka

The reduction in prices of iron ore up to 11% announced by state-owned NMDC has brought cheer to the steel industry as large number of buyers have lined up for Friday's e-auctions in Karnataka.

As many as 25 buyers have registered for participation at the e-auctions and are likely to bid for the high-grade ore put on auction by NMDC.

The monitoring committee, appointed by the Supreme Court to monitor e-auctions in Karnataka, has put on auction about 1.5 million metric tons for Friday’s auction.

According to sources, the NMDC alone has put on auction about 1-1.2 million metric tons of high-grade ore including a sizeable quantity of calibrated ore (C-Ore). There was not much demand for NMDC’s ore in the earlier e-auctions in the past two months due to very high prices fixed by the company.

With NMDC announcing a reduction of 10-11% in iron ore prices on Thursday for the month of November, the base price for its ore at Friday’s e-auction in Karnataka is likely to be fixed at Rs 4,600 per tonne for 63-64% Fe grade and above.

The monitoring committee has fixed Rs 2,330 per tonne for ore from other mines in the auction. It had reduced the prices by 10% about a month ago after the prices for the commodity declined below $100 per tonne in the international markets.

The reduction in prices by NMDC comes after several domestic steel mills complained to the steel ministry. NMDC was accused of charging higher prices in the domestic market.

In Karnataka, the iron ore auctions started in September 2011 following a Supreme Court direction as it had banned iron ore mining for a temporary period. Since the start of e-auctions, about 32 million metric tons of iron ore has been auctioned in the state. This includes about 8 million metric tons from NMDC.

The Apex Court had allowed NMDC to produce up to 1 million metric tons per month from its mines in Bellary district. However, due to logistical constraints, the company could produce only up to 700,000 metric tons per month.