NMDC, India’s biggest iron ore miner, sees no scope for a further reduction of ore prices when it revises the rates for April, even as globally ore prices tumbled to a six-year low this week.

If anything, the miner says domestic ore prices will firm up from the next month, signalling that it may not be able to accommodate the steel industry’s demand for further reduction in prices.

For the current month, the state-run company had slashed rates by 11-13 per cent — by ₹300 a tonne for lumps and ₹500 a tonne for fines to ₹3,250 and ₹2,460, respectively.

Last month, too, the miner had bowed to the pressures from the steel industry, cutting the rates by ₹450 and ₹300 a tonne for lumps and fines, respectively.

Apart from the steady fall in global prices of the ore in the last six months, the tepid demand of this raw material from the domestic steel industry, which is saddled with relatively higher inventory levels, had prompted NMDC to cut prices in December, February and March.

“As things stand today, the (ore) prices could only firm up from April,” Narendra Kothari, NMDC, Chairman and Managing Director, told BusinessLine .

Demand is likely to rise in the coming months, he added.

Global price crash

Globally, ore prices crashed to its six-year low to below $60 a tonne on March 5, compelling smaller miners in Australia to consider either rationalising their production or clamp a temporary closedown.

This situation was brought about by increased production from some of the new facilities of global miners such as Vale, BHP and Rio, apart from China cutting on its over-capacity.

Kothari feels global prices may move upwards of $65 from the next month.

Steel dumping

“For any miner, it is difficult to sustain at price levels below $55 to $57,” he pointed out.

The damp trend in the domestic steel industry was accentuated by significant dumping of cheaper steel from CIS (Commonwealth of Independent States) countries, with the prices of HR coil, for instance, dropping to ₹375 a tonne this month.

Domestic steel makers are estimated to have imported about 15 million tonnes (mt) of ore this fiscal.

While JSW may take more ore from NMDC vis-à-vis imports, Essar, which could pick up hardly 3.5 to 4 mt, against its commitment of about 8 mt, is also expected to increase intake from the domestic miner.

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