Days after RINL flayed NMDC for maintaining status quo on price front when global rates have nosedived to 5-year low, JSW Steel today said it may have to import around 10 million tonnes of iron ore this fiscal due to crunch in local supplies and higher prices of the key input.
JSW Steel, which is one of the major customers of NMDC, said it will import 10 million tonnes of key steel making raw material in FY'15 from the earlier estimate of 6 MT for its steel plants located in Karnataka, Maharashtra and Tamil Nadu.
"Earlier, we had planned for 6 MT iron ore imports in the current fiscal to feed our plants, but we may end up importing something like 10 MT due to domestic lower availability and higher prices," JSW Steel's Joint Managing Director and Group CFO Seshagiri Rao told PTI.
One of the biggest customers of NMDC, JSW Steel has 14.3 MT steel making capacity a year. It does not have any captive operational mine and depends on NMDC and other private miners for iron ore.
Attacking NMDC for maintaining status quo on price front even as international rates have fell to five-year low at USD 82-85 a tonne, RINL had, last week, wrote to Steel Ministry seeking its intervention as the costlier input was impacting its margin in a "difficult market".
Both NMDC and RINL are under the administrative control of the Steel Ministry.
"Global iron ore prices have softened significantly over the past one month and is trading at around USD 82-85 a tonne. However, NMDC, RINL's only source for supply of iron ore, has not adjusted the prices in tandem with international price movements, impacting our margins in a difficult market," RINL had said.
NMDC has been holding on the prices for last three months even as global prices have nosedived to currently stand at USD 79 per tonne. The PSU miner reviews prices every month by judging demand and global price.
The price of NMDC's lump ores, which contain more iron and are used mostly by domestic steel makers, now stands at Rs 4,600 per tonne and the prices of fines, having lower iron content, at Rs 3,160 a tonne.
A senior official of another private sector steel maker, who wished not be named, said the imported iron ore is cheaper by about USD 10 than domestic prices. Around 1.7 tonnes iron ore are needed to produce one tonne of steel.
"Hence, the steel-making cost of the Indian steel makers using domestic ore is going up by around USD 20 per tonne, rendering Indian steel expensive and vulnerable to cheaper imports," he said.
Tata Steel, which has also recently participated in an auction conducted by NMDC to sell its surplus ore, may also follow suit following the closure of its Noamundi mine in Jhrakhand.
The Steel Ministry has already written to the Finance Ministry seeking to abolish import duty on iron ore from the present level of 2.5 per cent.
