India Steel Market Watch
November 27: Public sector miner NMDC Ltd has cut iron ore prices by 12.5% with immediate effect on a sharp decline in its demand from steel mills.
In a BSE filing, NMDC said that its latest iron ore lump price has been revised to Rs 2,100 a ton, a decline of Rs 300 from its previous revision at Rs 2,400 a ton on November 3. But, prices of iron ore fines have been kept unchanged at Rs 1,560 a ton. In the last one year, NMDC has cut iron ore prices by over 50%.
Industry sources said the move was on account of lack of demand for ore. In fact, iron ore prices have fallen sharply in the last one year in global markets. Because of a sharp decline in freight rates, domestic steel mills are prompted to prefer imports to purchase from NMDC.
Domestic steel mills had urged NMDC to cut its iron ore prices in line with the fall in international markets. Globally, iron ore prices have declined by 22% but, the freight rate (Baltic Dry Index) has nosedived by 53% so far this year.
The company has set a target of almost doubling its mining capacity to 75 million tons in the next two years compared to the current capacity 34 million tons. Its production stood at 30.4 million ton in the last financial year.
The cut in the prices of the steel-making raw material comes at a time when steel mills are struggling to maintain their margins due to weak domestic demand. Steel mills in India have posted a sharp decline in their profitability in the last few quarters.