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Our Bureau

New Delhi, Dec. 4 The National Mineral Development Corporation (NMDC) on Thursday reduced prices of iron ore for domestic long-term contracts by around 25 per cent.

The new prices are effective from December 1 and the company will hold the prices for the next four months till March 2009, the Chairman and Managing Director of NMDC, Mr Rana Som, told Business Line after the company board decided to cut prices.

“Prices will come down in the range of Rs 470 to Rs 1,153 a tonne on various grades. However, there will be no change in our prices to international customers,” he said.

The new price band will be in the range of Rs 1,500 to Rs 3,500 a tonne as against the earlier band of Rs 1,900 to Rs 4,100 a tonne.

The main domestic buyers of iron ore from NMDC are private sector steel majors such as JSW Steel Ltd, Ispat Industries, Essar Steel as well as many other smaller players. The two largest steel makers — Steel Authority of India and Tata Steel — have their own captive mines and do not source iron ore from NMDC under long-term contracts.

The domestic steel manufacturers, however, do not appear to be happy with the quantum of reduction effected by the public sector mining giant.

Reacting to the development the Finance Director of JSW Ltd, Mr Seshagiri Rao, said that “any reduction is welcome but it is not adequate. If you compare the current spot prices and economic scenario it has to be reduced substantially.”

An official with Ispat Industries said that “it is too little too late. We are disappointed as we have been looking forward to NMDC rolling back its prices with effect from April 2008 onwards.”

Expressing similar disappointment, a spokesperson from Essar Steel said that “While we welcome the price reduction but based on the contract, we had expected a reduction of at least 40 per cent, which is in line with the prices currently prevailing in the market.”

Industry analysts pointed out that the fall in steel prices have been close to 50 per cent from the peak of $1,250 in May this year to around $550-600 a tonne now. Similarly, global iron ore spot prices too have come down from the peak of $140 a tonne in May-June this year to $65-70 a tonne today, they noted.

More Stories on : Announcements | Mining & Quarrying | Steel

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