In an interview given to a private news channel,Mr RK Goyal, managing director, Kalyani Steel explains how the steel industry is suffering due to the lack of iron ore. He says industry is starving on short supply of good quality iron ore and above that NMDC are keeping their prices higher than international market.
He said in the last couple of auctions, most of the material was having Fe (Iron) content less than 60 percent. Most of us do not have a beneficiation plant, therefore, we are not able to use majority of the ore. At the same time, the material having little higher Fe content was still priced much higher.
The price levels are still very high as compared to the international price, partly because NMDC has increased the base prices for material which has more than 60 percent Fe content and the requirement is much larger. The industry is really starving and at the same time, at the current level of prices the business is not viable. This is because imported steel is much cheaper. So, we have no choice, but to reduce our capacities further rather than buying the iron ore at NMDC prices and make much larger losses.
The total demand in Karnataka is more than 2.5 million tonnes per month. NMDC’s production is around 0.7 million tonnes per month. There is a big gap in the demand as well as the supply and there is no way it can be met today except by opening of the mines who have got all the approvals and for which the R&R plan is completed.
Two mines have opened a week ago. To that extent, more material will start coming, but we do not see more than 4 million tonnes additional material coming up by end of another 12 months.
NMDC is not reducing their ore prices as per market condition , at the same time, they have stopped production in one of the mines basically because they do not have place to stock the material. They should correct the price and sell the material. So if NMDC is not able to reduce the price or if they are not reducing the price, the industry is not able to buy at those prices and hence the industry is suffering because iron ore is not available at the right price and NMDC is closing their mines.
Source: Money Control
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