Odisha miners cut iron ore lumps prices

Merchant miners in Odisha have gone for a marginal cut in iron ore lumps prices over the past week while keeping fines rates unchanged.

Prices of lumps have corrected by Rs 100-200 a tonne and is currently hovering at around Rs 2,600 per tonne.

"There is clear lack of demand from steel firms which are operating at depleted capacities. Miners are forced to slash prices since there are not enough buyers. Mine owners are now finding it difficult to sustain operations and some of them are even operating at zero profitability. In the coming months, ore prices are likely to crash further as there is no near-term revival expected in the steel sector", said a senior official of a standalone mining company.

Miners are presently offering iron ore fines in the range of Rs 1400-1500 a tonne. Fines prices are also expected to plunge in the near term as operations of pellet makers is at stake though some miners have recently raised it by up to Rs 200 a tonne.

Manish Kharbanda, executive director and group head (mines & minerals), Jindal Steel & Power (JSPL) said, "The major merchant miners have increased the prices of iron ore fines by Rs 200 as a tactical move to subdue the pellet market and enhance DRI lump sale. This is a counter productive measure for the miners and would have an overall negative impact on production of pellet in the State. The State based pellet industry has an overall capacity of 30 million tonne per annum and generates employment for 30,000 natives of the state besides contributing revenue to the tune of about Rs 2000 crore per annum. For the merchant miners the slump in sponge prices due to import influx implies that even these rates of DRI lump would not be sustainable and another price cut would soon have to announce leading to drastic fall in contribution. The iron ore fine offtake due to manipulative pricing has already reduced and it would go down further with pellet plants reducing production."

While merchant miners have softened prices, state run Odisha Mining Corporation (OMC) has stuck to its high reserve prices at the e-auctions. At its last e-auctions held last Monday, the floor prices from OMC's Daitari mines were kept largely unchanged at Rs 2200 per tonne and Rs 1500 a tonne respectively.

Pukhraj Sethiya, associate director- energy (coal & mining) at PricewaterhouseCoopers said, "Global iron ore prices are still soft while key producers have increased prices by marginal amount in India. With soft steel prices and global supply surplus, Indian steel players are finding it challenging to produce and compete in market. Iron ore prices in India need correction to move in line with global market for Indian steel to remain competitive."