NMDC, a state owned
and India's largest Iron ore miner, is under pressure on cutting its prices as steel makers prefer sourcing iron ore from private miners
based in Odisha.
Since NMDC has
switched to the monthly pricing mechanism (from October 2012), the company is
consistently cutting its Iron ore prices. NMDC has corrected lumps prices by
almost 27% and around 6% in Iron fines
since October 2012. There is further scope of correction in prices according to
industry sources.
“Currently,
landed cost of CLO (5-18mm) from Odisha to any sponge plant in Raipur
(Chattisgarh) is around Rs 7,100/t (including royalty) . Whereas, CLO from NMDC
will cost us around Rs 8,000/t (including royalty).
“Moreover, in the
last few weeks, off take form NMDC has come down significantly which indicates
that demand for NMDC's Iron ore is weak and steel plants are more focused on
Odisha for their raw material requirement,”said a large sponge iron
manufacturer based in Chhattisgarh.
NMDC has been
supplying Iron ore majorly to RINL, ESSAR Steel, JSW and some portion of iron
ore supply is reserved for steel plants based in Chhattisgarh.
According to sources, most of the buyers have
reduced their purchases form NMDC over falling steel demand and prices. NMDC is likely to review
its August prices in the first week of August.
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