The State-owned miner NMDC has kept prices of iron ore unchanged for the current month to ensure better sales and keep them in line with that in Odisha, even as global rates have escalated.
“The NMDC board met on February 2 and decided to keep the iron ore prices for both lumps and fines varieties of the raw material unchanged at previous month’s level,” a source present at the meeting said.
Incidentally, international prices of iron ore for lumps — the superior variety of key steel making raw material — are ruling at around $148 (about Rs 7,800) a tonne, against just $87 per tonne in last September, mainly on high Chinese demand.
In contrast, NMDC is selling lump variety, which Indian steel makers use mostly, at Rs 5,080 per tonne.
The company has desisted from raising the price for current month following a reduction of Rs 320 per tonne in January, mainly to bring the parity with the available price in other iron ore mining states like Odisha.
“The other reason for maintaining status quo is to ensure more sales of lump ore as stocks were piling in the pitheads of NMDC’s mines in the absence of buoyant demand from domestic steel makers,” he said.
Domestic steel makers have been operating their plants at below capacity in the wake of poor demand by end-use industries such as construction, automobiles and fast moving consumer durables, among others.
NMDC has 32 million tonnes per annum iron ore production capacity at its mines in Chhattisgarh and Karnataka.
He said the price of fines variety, which bears low iron content, also left unchanged like in the previous month and this is again because NMDC’s fines are a little expensive than what is available in Odisha.
NMDC had in January also decided to keep the price of fines unchanged at Rs 2,610 per tonne.
Company Chairman C S Verma had earlier said the company will take stock of demand-supply situation, international prices of the raw material and prevailing domestic prices before taking any call on the prices.
The company had raised the price of iron ore by 8-13 per cent for the July-September quarter when international prices were low. From this quarter, NMDC decided to revise prices of iron ore on a monthly basis.
In October, it reduced prices by 2-11 per cent and followed by 3-11 per cent cut in November.
It however did not tweak the prices in December, primarily to pacify steel makers which accused the state-owned firm of selling iron ore at a higher cost domestically and exporting at cheaper rates.
Keywords: No hike, iron ore prices, NMDC, current month, better sales
Comments:
Global iron ore fines prices are $140-145/ton = Rs.7500 per ton and NMDC sell its ore at Rs.2600/ton !! The Govt loses Rs.4900/ton which when multiplied by the 25 mill tons of yearly supply of NMDC to domestic steel producers works out to a whopping subsidy of Rs.12,000 crores! This can happen only in India. More so at a time when the Govt is under severe stress on fiscal deficit front. It is only due to high export duty of 30% and equal rail freight differential for export imposed by the Govt at the behest of steel mills to prevent exports, which also acts as a tariff barrier to lower the price of ore to that extent for the export option and allows the domestic mills to buy ore at 35% of the global price. Imagine, without the export tariff barriers, Govt would gain additional Rs.12,000 crores through NMDC. Thus they are losing on foreign exchange earnings of the country from export of iron ore as well as losing by NMDC supplying ore way below market level.
Global iron ore fines prices are $140-145/ton = Rs.7500 per ton and NMDC sell its ore at Rs.2600/ton !! The Govt loses Rs.4900/ton which when multiplied by the 25 mill tons of yearly supply of NMDC to domestic steel producers works out to a whopping subsidy of Rs.12,000 crores! This can happen only in India. More so at a time when the Govt is under severe stress on fiscal deficit front. It is only due to high export duty of 30% and equal rail freight differential for export imposed by the Govt at the behest of steel mills to prevent exports, which also acts as a tariff barrier to lower the price of ore to that extent for the export option and allows the domestic mills to buy ore at 35% of the global price. Imagine, without the export tariff barriers, Govt would gain additional Rs.12,000 crores through NMDC. Thus they are losing on foreign exchange earnings of the country from export of iron ore as well as losing by NMDC supplying ore way below market level.
The global prices will not fall much because expansion plans of BHP VALE have invested hundreds of billions of dollars on new mines exploration, chinese expansion in africa mangolia will manage supply side every body will try to recover there investment within schdule pay back period, india does not have any long term investment only short term policy changes, looking after small states intrest like odisha fluctuations will occur,The near term strategy is not very encouraging.
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