Orissa Mining Corporation (OMC), a mineral resources company under the Orissa government, is expecting iron ore prices to drop 40-50 per cent in its next tender.
S K Sarangi, managing director, OMC said, prices for calibrated iron ore (CLO) and fines would be revised 40-50 per cent downwards. He was speaking on the sidelines of the CII Biz Bridge.
Prices of sponge iron grade iron ore were seen at Rs 2,800 per ton compared to Rs 5,600 a ton during April-August, while blast furnace grade CLO would be Rs 1,500-1,700 a ton against Rs 4,500 a ton and fines would range between Rs 700-1,000 a ton compared to Rs 1,600-2,800 a ton.
Sarangi said, so far the lifting of iron ore sold through tender had been good. OMC has sold three million tons against a target of 6.5 million tons this year. Last year, OMC sold 4.5 million tons. OMC floats tenders on a quarterly basis and there is no long-term contract. Not just iron ore, chrome ore prices had also dropped 30-40 per cent.
However, there was no clear indication from ferrochrome players that prices would drop in the next tender. Sarangi said, there were large stocks of ferrochrome and if chrome ore prices dropped then ferrochrome prices would also have to be revised downwards, which meant huge losses for the producers. However, commodity prices have all dropped and was expected to take a toll on the turnover of OMC this year.
Sarangi said, OMC had set a target of Rs 3,000 crore revenues this year but was likely to end the year with Rs 2,000-2,200 crore of revenues. OMC was also considering selling iron ore through long-term contracts in the near future. Sarangi said, by 2013-14 OMC would do 20 million tons of iron ore and would then have to go for long-term contracts.
Unlike NMDC, India’s largest iron ore producer and exporter, which has long-term contracts for bulk of its production, OMC sells through open tender. The NMDC board is also likely to consider price revision on November 25.