New Delhi: Iron ore miner NMDC's price cut of up to 11 percent earlier this week has failed to bring cheers among domestic steel makers, who said prices should be brought down to the level of global rates.
"When the international prices were falling, NMDC had increased the price last quarter. Now, they have reduced the price but not to the extent they have increased the price. The reduction does not justify what is happening on the ground," JSW Steel Group Chief Financial Officer MVS Seshagiri Rao saidon the sidelines of World Steel Association event here.
Expressing dissatisfaction over the level of price cut, Essar Steel's Chief Executive Officer and Managing Director Dilip Oommen also said at the current price, NMDC would end up keep on adding stockpiles at the pit-head as there would be no takers for the lump variety of iron ore for which only two percent reduction has been effected.
India's largest iron ore miner NMDC had earlier this week cut iron ore prices by up to 11 percent for October. The move could have come following accusation from domestic steel firms that it was charging higher prices for them, while exporting at lower rates.
JSW Steel and Essar Steel are two leading domestic customers for NMDC's iron ore.
State-run steel maker Rashtriya Ispat Nigam also recently wrote to the Steel Ministry to impress upon NMDC to bring down prices anticipating its bottom line to be severely affected during the second quarter of the current fiscal due to sharp increase in the price of iron ore, mostly supplied by NMDC.
NMDC had in August announced a hike in the contract price of iron ore by 8-13 percent for the July-September period to cash in on demand-supply mismatch scenario in the market. During the April-June quarter also, it had raised the price by 8-10 percent.
NMDC Chairman C S Verma, however, discounted criticism saying that the reduction was aimed at keeping the price in consonance with the international prices. Moreover, he said, NMDC produces only 15 percent of the domestic iron ore.
"NMDC controls only 15-17 percent of iron ore production in the country. The remaining is left with other companies. If companies who can afford buying from others, they should buy from others. We have to keep pace with market," Verma said.
India's iron ore production came down to 169 million tonnes last fiscal. Industry body FIMI expects it to reduce further to 140 million tonnes in the current financial year.