NMDC to decide on Jan iron ore prices this week

Amid charges of selling iron ore at high rates, state-owned miner NMDC has said it will decide on prices for January at a board meeting on Wednesday.

The pricing will be based mainly on demand-supply situation as well as the prevailing rates globally, NMDC's acting Chairman C S Verma said.

On consulting firm KPMG, appointed by the miner to help it devise a pricing formula for the mineral, he said it is expected to submit the report by January-end.

"We have board meeting on January 2 to decide the pricing for January 2013. We will take stock of the situation and demand, supply position and international prices and prices prevailing in India. Then the board level sub-committee will look into miner details and recommend prices," Verma told PTI.

Market experts maintain that the prices for the month may remain unchanged as the miner had substantially raised rates in August and September when international prices were low.

The prices were kept unchanged by NMDC in December after cuts of up to 11% for categories, lumps and fines, before that.

Accordingly, average price for iron ore lumps with 65% iron content are hovering around Rs 5,400 per tonne. Similarly, average price of fines, which have iron content of less than 60%, are at Rs 2,600 per tonne.

Price revisions of October and November had come after various domestic steel firms and industry associations had complained to the Steel Ministry about NMDC allegedly misusing its dominant position in the domestic market.

The iron ore producer was accused of charging higher prices from domestic firms, while exporting at lower rates. It had hiked the prices by 8-13% for the July-September period, when international rates were down.

According to Sachin Sehgal, Director of Ore Team, a steel and steel making commodities research house, international iron ore prices have gone up by 20-25% due to demand rebound in China.

"NMDC has substantially increased ore prices three months ago when the international prices are low. This time, in order to keep parity they may not go for hike," Sehgal said.

Verma said, meanwhile, that NMDC has market share just 14% and is not in dominant position to determine price.

"NMDC's market share in India iron ore market is just 14%. If other steel companies find NMDC prices are too high and they cannot afford, there is 86% market available outside," Verma said.

He said companies can always buy iron ore from outside, and that the NMDC is selling its commodity without any problems.

On KPMG's report on pricing mechanism, Verma said the it has already had consultations with some of our board members. "I think in a month's time they should be ready with draft report and then it will be presented to the board and fianlise."