Despite global iron ore prices remaining stable in the last few weeks, NMDC may hike prices of its ore for the July-September quarter.

The iron ore miner is likely to increase its prices by 8-10 per cent for lumps and fines, sources said. It is likely to take a call on the July-September price list in the next few days.

NMDC has more room now to insulate its prices from global trends, as its new pricing mechanism is based on domestic demand-supply dynamics instead of the earlier export parity formula.

It had injected a similar hike for the last quarter, with the increase ranging from Rs 250 to Rs 400 a tonne. Higher grade iron ore lumps are currently priced at about Rs 5,400 a tonne, while fines have a price tag of about Rs 2,800.

Production

Domestic ore production has not been as high as expected due to the continuing delay in opening of new smaller mines in Karnataka and production at existing mines affected by the monsoon.

Besides, there were expectations that the ban on iron ore mining in Karnataka will be partially lifted last month.

Some 16-20 smaller mines were scheduled to be opened in Karnataka, but these have been delayed due to various reasons, chiefly on the clearances issue.

Supply position

Opening of these mines could have significantly improved the domestic supply position, giving reason for miners to ease prices, industry players point out.

NMDC, which accounts for nearly 40 per cent of India’s iron ore production, supplies the material to steel makers such as SAIL, Essar Steel, JSW and Rashtriya Ispat Nigam Ltd. Steel makers, which have been increasing their prices since January, will have to take a call on whether to pass on the ore price hike to their customers.

NMDC’s price hike decision will have to be taken by Mr C.S. Verma, SAIL Chairman, as he holds additional charge as Chairman and Managing Director of NMDC.

(This article was published on July 18, 2012)
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