Local steel makers were in for a surprise when NMDC Ltd, the country’s largest iron ore miner and supplier to most steel and sponge iron makers, announced a cut of up to 11 per cent in iron ore rates.
However, NMDC has decided to review prices every month now, instead of once every three months, which was its earlier practice. This 2-11 per cent cut is valid only for October.
Steel makers, however, are not amused by this move. “NMDC increased prices by 8-13 per cent in the last quarter when globally iron ore was getting cheaper. This reduction of 11 per cent has just brought the prices back to the April-June quarter levels. There has to be a meaningful reduction, in line with global rates,” an official from JSW Steel Ltd said, requesting anonymity.
Iron ore prices have been on the downward spiral for the past few months and a slowdown in Chinese demand has put further pressure on prices. An official from Essar Steel Ltd, who also did not want to be named, said this price cut by NMDC was indeed a “good news”.
Steel makers, however, are still sceptical on how much benefit they will be able to derive from this price cut as steel prices, too, are reeling under tremendous pressure. Last month, steel makers were forced to cut prices by two-three per cent as the demand was slow.
According to the JSW Steel official, the government’s reform talk in the past few weeks is expected to turn around the sentiment and the company is hoping for steel demand to pick up.
According to the Joint Plant Committee, the official custodian for iron and steel data in the country, the real consumption of steel grew 5.4 per cent during April-September, whereas the total steel production in this period rose 3.1 per cent.
Steel makers have been voicing their concerns against cheap imports to the country, especially from nations, such as Japan and South Korea with which India has signed free trade agreements. In the April-September period, steel imports grew 33.7 per cent to 3.8 million tonnes.