OMC cuts iron ore floor price, fetches better response at e-auctions

State run miner Odisha Mining Corporation's (OMC) move to cut floor price of iron ore lumps and fines has drawn a better response from the buyers at its latest e-auctions held last Monday.

In case of lumps (with Fe content of 62-64%), the prices have been slashed by Rs 400-700 per tonne whereas fines prices have been corrected by Rs 100-300 a tonne. Lumps prices have gone down by 18-30% while in case of fines, prices have dropped in the range of 7-24%. Base prices of lumps were fixed in the band of Rs 2000-2300 per tonne while for fines, it was in the range of Rs 1150-1500 per tonne.

OMC's rate cut follows global trends with iron ore prices touching all time low. Iron ore prices have plummeted to a level of $41 a tonne, touching a 10 year low. Besides, global oversupply of iron ore has prompted leading iron ore producer National Mineral Development Corporation (NMDC) to go for a drastic price cut from Rs 3200 to Rs 1500 a tonne.

"The price reduction by OMC is welcome. But there is scope for further correction of base prices to ensure resounding success for e-auctions. OMC needs to tune in pricing strategies, factoring in market prices", said a senior official with a steel company.

Out of 381,000 tonne offered for sale by OMC at the e-auctions, 196,000 tonne was sold, representing a success rate of 51.44%.

OMC's previous attempts to despatch ore through auctions drew a lacklustre response from buyers, due to its prohibitive floor prices. The quantity of unsold ore by OMC had piled up, taking its inventory to the level of six million tonne.