New Delhi: State-run miner NMDC has raised iron ore prices by Rs 250-300 a tonne for June allegedly aimed at cashing in on subdued domestic supply scenario, a move that might stoke steel prices. A company source said NMDC has raised the price of lump variety, which contains more iron and used mostly by domestic steel makers, by Rs 300 per tonne and by Rs 250 per tonne for fines or lower grade iron ore.
Following the hike, fines price will go up to Rs 3,160 a tonne from Rs 2,910 earlier and lump prices to Rs 4,600 per tonne from Rs 4,300 a tonne a month ago. The price rise did not go well with private sector steel makers which do not have captive mines and described NMDC's move as an attempt to take advantage of domestic short-supply scenario mainly after the partial ban in Odisha.
"Currently, steel companies are not in a position to absorb any increase in costs. Essar Steel is forced to pass on cost increase to its customers," an Essar Steel spokesperson said. Essar Steel requires 15 million tonnes of iron each and JSW Steel needs 20 million tonnes per annum to their plants at full capacity. NMDC, country's largest producer of iron ore, had lowered the price of lump by Rs 200 in May.
No changes in fines prices were made last month. The company reviews prices every month. In March and April, NMDC had kept lump prices unchanged, while it had raised the rates of iron ore fines by Rs 100 per tonne in February. Due to sluggish market conditions, NMDC had hiked rates only thrice since November, 2012 and that too only marginally.
The Supreme Court had on May 16 directed closure of 26 leases whose agreements had expired and directed the state to decide on reopening them within six months. The state acted swiftly and allowed eight iron ore mines, including those of Tata Steel and Steel Authority of India (SAIL), to reopen in the recent past. Iron ore supply was not adequate since the ban on mining in Karnataka and Goa. Though the ban has been lifted in these two states, production is yet to pick up.
