4 JAN, 2013, RAKHI MAJUMDAR, ET BUREAU
KOLKATA: Stung by an uproar over high ore prices, NMDC, the country's largest iron ore producer has slashed price of premium lump ore by 5.9% for January 2013, its steepest cut in months. This comes even as international prices have firmed up to $145/tonne. However, the rate cut is unlikely to add much cheer to the domestic steel industry which feels the price reduction is too small.
"We have decided to slash lump ore prices by 5.9% for January 2013. However, price of iron ore fines will remain unchanged," said CS Verma, acting chairman of NMDC, who is also chairman of Steel Authority of India. Verma explained the price cut in the face of stronger international ore prices by saying the company responded to the domestic steel industry which has been critical of NMDC's steep prices for lump ore. He was speaking after the company's board meeting at Hyderabad on Wednesday. "About 70% of our sales come from fines, price of which remains the same at Rs 2,160 per tonne," he added.
International prices for 62% grade iron ore went up by 24% during December 2012 and are now hovering around $145 per tonne. "Iron ore price have been firming up globally in the last one month and this implies international steel prices are also likely to go up," Verma said.
However, NMDC's move has failed to impress the industry. RV Gumaste, managing director of Kirloskar Ferrous Industries said. "The quantum of the reduction is very small. The December realisation of pig iron prices dropped at an average of Rs 1,200 per tonne as compared to prices in November. For instance the landed price of pig iron in Punjab was about Rs 33,000, a tonne in November and in December it declined Rs 2000 to Rs 31,000.
"Moreover, NMDC's price reduction of 5.9% means Rs 300 a tonne, which is miniscule. Global prices keep fluctuating month on month and week to week. NMDC takes a long time to respond to market dynamics. When iron ore prices scraped the bottom at about $90, NMDC did not pass on the prevailing market price to steelmakers, their pricing always has a lag. Thus, manufacturers don't get any benefit from price fluctuations in the international market," he added.
In India we should get benefit from iron ore being locally available and we (steelmakers) have often expressed our willingness to pay export parity prices ex-mines. With this sort of pricing, our margins have been impacted badly, Gumaste said.
KOLKATA: Stung by an uproar over high ore prices, NMDC, the country's largest iron ore producer has slashed price of premium lump ore by 5.9% for January 2013, its steepest cut in months. This comes even as international prices have firmed up to $145/tonne. However, the rate cut is unlikely to add much cheer to the domestic steel industry which feels the price reduction is too small.
"We have decided to slash lump ore prices by 5.9% for January 2013. However, price of iron ore fines will remain unchanged," said CS Verma, acting chairman of NMDC, who is also chairman of Steel Authority of India. Verma explained the price cut in the face of stronger international ore prices by saying the company responded to the domestic steel industry which has been critical of NMDC's steep prices for lump ore. He was speaking after the company's board meeting at Hyderabad on Wednesday. "About 70% of our sales come from fines, price of which remains the same at Rs 2,160 per tonne," he added.
International prices for 62% grade iron ore went up by 24% during December 2012 and are now hovering around $145 per tonne. "Iron ore price have been firming up globally in the last one month and this implies international steel prices are also likely to go up," Verma said.
However, NMDC's move has failed to impress the industry. RV Gumaste, managing director of Kirloskar Ferrous Industries said. "The quantum of the reduction is very small. The December realisation of pig iron prices dropped at an average of Rs 1,200 per tonne as compared to prices in November. For instance the landed price of pig iron in Punjab was about Rs 33,000, a tonne in November and in December it declined Rs 2000 to Rs 31,000.
"Moreover, NMDC's price reduction of 5.9% means Rs 300 a tonne, which is miniscule. Global prices keep fluctuating month on month and week to week. NMDC takes a long time to respond to market dynamics. When iron ore prices scraped the bottom at about $90, NMDC did not pass on the prevailing market price to steelmakers, their pricing always has a lag. Thus, manufacturers don't get any benefit from price fluctuations in the international market," he added.
In India we should get benefit from iron ore being locally available and we (steelmakers) have often expressed our willingness to pay export parity prices ex-mines. With this sort of pricing, our margins have been impacted badly, Gumaste said.
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