Wednesday, April 06,
Japan’s steel mills are keen to renew their long term contract with NMDC which expired on March 31, 2011.*
NMDC exports about 15 per cent of its production mostly to Japan and China.
“Japan is keen on buying iron ore. We have submitted a proposal (for a new contract) that was approved by the Group of Secretaries and will now go before the Cabinet for approval,” said, Mr Rana Som, NMDC Chairman and Managing Director.
NMDC’s contract with Japanese Steel Mills was on an annual basis for the first four years and changed to a quarterly pricing system in 2010-11, in line with the iron ore miner’s shift to a new pricing mechanism for all buyers.
Industry analysts say that Japan is keen on building up stocks of the raw material to feed its steel mills when they resume production, as part of its reconstruction exercise. Analysts estimate that six months down the line, Japanese steel industry will begin to consume higher quantities of iron ore, as steel production picks up.
Although NMDC hiked prices of ore lumps by 10 per cent provisionally for the April to June 2011 quarter, without changing the rates for fines, it is expected that spot prices of the ore will continue to fall for the next few months in the wake of the Japan disaster.
Spot prices for iron ore fell to $180/MT in the immediate aftermath of the tsunami, after the mid-February peak of $200/MT
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