Iron ore prices to remain high

Demand remains buoyant despite supply glut

Domestic iron ore prices are expected to remain high in the coming months, beating down factors that could put downward pressure on the key steel-making raw material, industry executives said on Tuesday.

State-owned Odisha Mining Corporation (OMC) has hiked its floor price for April. The price of iron ore lumps was raised by 16 per cent to Rs 2,800 per tonne from Rs 2,400 in February, and that of fines was hiked by 14 per cent to Rs 1,600 per tonne from Rs 1,400 per tonne. The sponge iron industry’s demand for lumps and the pellet segment’s demand for fines triggered the price increase for the current month, said OMC.

NMDC has raised prices in some clusters. “The next price revision depends on international price movements. There is a glut in iron ore supplies in Odisha but the demand remains buoyant,” an OMC executive close to the development told Business Standard, without clearing the air on decisions regarding iron ore pricing. 

International prices have moderated in the past one month. NMDC, which has kept its iron ore price for April unchanged, said it increased prices in clusters in which the demand was strong.

 “We are not revising overall ore prices but looking at cluster-to-cluster demand. At current rates they are competitive in the domestic market,” an NMDC official told Business Standard.

The miner had registered a growth rate of 20 per cent in production and 24 per cent in sales of iron ore during 2016-17 over the previous financial year, it said in its release.

NMDC produced 34.03 million tonnes and sold 35.62 million tonnes of iron ore in 2016-17 as against production of 28.58 million tonnes and sales of 28.84 million tonne in the previous financial year, it said.

NMDC said its production and sales of iron ore were the highest ever. Meanwhile, Odisha’s iron ore production in 2016-17 is expected to be more than 100 million tonnes. “Since our (NMDC) ore price is at a heavy discount of 35-38 per cent to the landed cost of imported ore and there is also a good pick-up in volumes expected in coming months, we do not see NMDC facing pricing hurdles going ahead,” said the executive.

The iron ore miner had raised prices across clusters for the first couple of months, citing a demand pick-up. “In the current quarter, since steel companies are still clearing their inventory, the demand for ore is not strong but we will make up for the tepid sales in the remaining part of the quarter,” said the NMDC executive. 

There is a glut in the domestic iron ore market for the last couple of years and ore miners do not see this factor as a setback in pricing.