NEW DELHI: NMDC has hiked iron ore prices by around 10 per cent on rising demand for the raw material used in making steel.
The state-run miner’s latest move may prompt key customers such as Essar Steel India Ltd, JSW Steel Ltd and Rashtriya Ispat Nigam Ltd (RINL) to revise their prices upwards.
“Prices of iron ore lumps have been increased by 10 per cent and fines by about 8 per cent,” said Mr N. K. Nanda, acting Chairman and Managing Director, NMDC. The latest hike ranges from Rs 250-400 a tonne.
Higher grade ore lumps with 65 per cent iron content are now priced at Rs 5,400 a tonne, while the fines with 64 per cent iron are priced at Rs 2,800, Mr Nanda said. NMDC has a 40 per cent share of the country’s iron ore market.
“It is definitely a cost push. We don’t have any other option but to pass on the hike in costs to consumers,” said Mr Dilip Oommen, CEO and MD, Essar Steel India Ltd.
“We are formulating prices and will take a decision soon,” Mr Oommen said. Iron ore price rise is the latest blow to steel makers without captive mines. Steel makers are already reeling under the impact of the freight hike imposed by the Railways in March.
Besides, a weakening rupee has made import of raw materials such as coking coal costlier for them. The rupee has weakened by some 4 per cent since April 1.
“There is no option but to buy at whatever prices they offer,” said Mr Vinod Nowal, Director and CEO, JSW Steel Ltd, which has been buying iron ore through e-auctions from NMDC in Karnataka.
The steel makers have seen disruption in iron ore supplies following the ban on mining in Karnataka. Prices of iron ore lumps have gone up by an average Rs 600 a tonne since the beginning of this year, while fines have appreciated by about Rs 200 a tonne.
“Prices of the final product (steel) are driven by the international market. We will have to keep a balance in the market, else imports will turn cheaper,” Mr Nowal said when asked whether the company would pass on the price hike to consumers.
Since January, steel prices have been firming up with large producers, including SAIL and Tata Steel, increasing their prices by Rs 1,000-1,500 a tonne on account of improving demand.
Steel off-take, which grew at a sluggish pace of around 5 per cent in 2011-12, is forecast to grow by 8-9 per cent in the current financial year.