NMDC May Adopt Differential Pricing to Boost Sales

National Mineral Development Corporation (NMDC) India’s largest iron ore producer may adopt differential pricing policy for different states to boost sales. The miner plans to raise iron ore production which would be used by the state based units. Manganese Ore India Limited (MOIL ) has also adopted differential pricing policy to compete imports. 

Karnataka iron & steel Manufacturer’s Association (KISMA) via letter to the Prime Minister Office has requested to intervene into the matter for uniform pricing policy by NMDC.

Karnataka being the 3rd largest iron & steel producer in the state has an annual requirement of nearly 35 MnT iron ore. While the current iron ore supply in the state being nearly 22 MnT pa there seems to be a shortage of around 13 MnT.

Since its existence, NMDC has adopted a uniform pricing policy across the country however it is now learned that the miner wants to adopt a differential pricing policy in Karnataka. As per the view of steel makers in the state of Karnataka, NMDC wants to adopt a differential pricing policy to take advantage of the iron ore shortage in the state.

Implemetation of differential pricing by NMDC will make the steel producers in Karnataka uncompetitive and they would be at a greater disadvantage compared to other parts of the country.

NMDC iron ore price trend in Karnataka e-auctions

Since beginning of this fiscal, prices of lump (Fe 62.5%) prices have fallen by around 44% and fines (Fe 60%) prices have fallen by 37% in Karnataka e-auctions.

The miner had rolled over the prices last month- Baila lump (Fe 65%) – INR 1,800/MT and Baila fines (Fe 64%)- INR 1,560/MT (excluding royalty, DMF & taxes). If we consider the Karnataka e-auctions conducted last month the bid prices were as follows-

Basic prices in INR/MT
*Fe 61.1
Source: Karnataka DMG, SteelMint