KOLKATA (miningweekly.com) – India’s largest iron-ore miner, NMDC Limited, has provoked the ire of local steel producers by maintaining iron-ore prices for the fourth consecutive month, despite steadily falling international prices of the raw material.
Government-owned and -managed steel producer Rashtriya Ispat Nigam Limited (RINL) has asked the Steel Ministry to intervene, saying the costlier raw material from NMDC was seriously impacting on the margins of finished steel.
Steel producers pointed out that while international prices of iron-ore and finished steel were on a downward curve, Indian iron-ore prices were moving in the opposite direction, while steel producers were having to maintain parity of domestic steel prices with international prices to combat competition from imported steel products.
RINL, which operates a 6.3-million-tonne-a-year steel plant in the southern Indian port town of Visakhapatnam, is among the few companies, which do not have any captive iron-ore mines, and is entirely dependent on buying iron-ore from NMDC.
Incidentally, both NMDC and RINL are under the administrative control of the Steel Ministry.
For the fourth consecutive month, NMDC announced last week that it would maintain iron-ore prices for October shipments at $75/t for lumps and $51.5/t for fines. This at a time when international prices have fallen to a five-year low of about $80/t to $81/t.
A senior RINL official said that, unlike several private sector steel producers, government-owned RINL was hamstrung in resorting to imports to meet raw material requirements, owing to stricter regulations and oversight norms and longer decision-making processes, which were major disadvantages in concluding large volume transactions in international spot iron-ore markets.
When contacted, an NMDC official said that the miner had its own pricing mechanism linked to domestic production and demand parameters and was not linked to international market trends.
He said domestic demand was still robust and supplies to the local market remained tight as problems relating to restarting mines in Karnataka and Goa still remained unresolved. The official added that NMDC would aim to increase supplies to domestic steel producers to around 35-million tonnes by the end of the current financial year, 10% higher than ore supplies during the correspondent previous period.
Sources said that NMDC was emboldened to maintain domestic prices in the face of falling international prices as even steel producers with captive mines, such as Tata Steel, were planning merchant purchases from NMDC and imports totalling half-a-million tons during the current year, after its Noamundi mines in Jharkhand were forced to close down by the local government.