NMDC to e-auction 3,48,000 MT of iron on Feb 11

NMDC is to offer 3,48,000 MT of iron ore which includes both lumps and fines to steel mills based in Karnataka, on the 11th of this month (monday) through e-auctions.

Quantity to be offered:

Iron ore Lumps 72,000 MT, iron ore calibrated lumps 96,000 MT, iron ore fines 132,000 MT and iron ore low grade fines 48,000 MT

From Donimalai mines:

Iron ore Lumps 72,000 MT, iron ore fines 52,000 MT and iron ore low grade fines 48,000 MT

From Kumarswamy mines:

Iron ore calibrated lumps 96,000 MT and iron ore fines 80,000 MT

In the latest e-auction on February 1, the state owned miner got rid of only 46% (212,000/MT) of the total quantity (460,000/MT).

The bid price was a 19% increase over the floor price. Expensive lumps did not interest steelmakers in Karnataka but fines was sold out completely.

Why are lumps prices in e-auctions not coming down?

Supreme Court has ordered NMDC to e-auction some proportion of iron ore from the state Chhattisgarh to cater to the need of steelmakers dependent on NMDC's material in the nearby location.

The nations largest miner has long supply contracts for Bailadila iron ore. It has to maintain its pricing policy for both long term supply contracts and e-auctions.

NMDC's long term supply contract buyers might not be happy about cheaper lumps being offered through e-auctions when they are paying high for the same. 

NMDC also had to synchronize its prices as quality gets affected when output is higher. The company is also trying to maintain production levels that had been impacted previously.

In January this year, out of 3.06 mt of production, NMDC sold out 2.7 mt of its raw material.

Earlier, there was less response due to evacuation problems in Donimalai mines on account of issuing permit delays and documentation.

Now that the procedure is smoothing and logistics system is streamlined, sales is improving.

In the last few months, things have been far better only after shifting to quarterly pricing policy. Demand for iron ore had slowed down as the steel industry met with a downturn in 2012.