The industry was quiet hopeful for the month of May, NMDC-Nations's largest state owned miner of Iron ore would consider some reduction for prices of iron ore lumps. Whereas, fines prices was anticipated to remain unchanged.
As NMDC decided to continue charging lumps at prices equal to April levels, sponge iron manufacturers in the state of Chhattisgarh are the worst hit.
NMDC is charging:
6-40 mm Kirandul lumps Fe% 65 Rs 4,600/MT And, 10-150 mm Bacheli ROM Fe% 64 Rs 4,000/MT
Iron ore fines Fe% 64 Rs 2,610/MT
(Basic prices, excluding royalty and taxes).
Sponge iron manufacturers based in Chhattisgarh told SteelMint, “There are only two options left. Either, we have to take a shut down for around a fortnight or more. Else, looking at the poor realizations of sponge iron industry, NMDC should on an urgent basis, call for a meeting about lowering its offers for lumps.
Our manufacturing cost for sponge iron is standing at 130% now. Of this, 80-82% is only cost of the raw material – lumps. Hence, we are running with losses at 30%.
Only the parties who are into earlier commitments with NMDC, are procuring its raw material at the moment. Otherwise, buying from the state owned miner is on hold presently.
From Odisha also, its is being quiet difficult for us to purchase lumps at Rs 7,500/MT (landed cost). The difference between the landed costs of procuring material from NMDC and miners in Odisha is at Rs 600/MT“.
The Indian sponge iron industry has met with price levels seen two years back, are using low grade iron ore which is resulting in inferior quality output. They are switching to imported ferrous scrap and paying high for power.
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