The steel ministry is considering an advisory group for public sector miner NMDC to rein in any potential price surge in iron ore, sources said.
Iron ore prices have been on an uptrend for a while. The idea is to check input costs so that steel companies, on the threshold of recovery, are not impacted.
Globally, iron ore prices have increased from $43.45 to $88 a tonne in one year. NMDC prices have increased by 35 per cent during the period.
Ore producers are apprehensive that an effort to control NMDC prices would impact private sector producers as well, since NMDC is the largest iron ore producer. Though a mining company, NMDC happens to be under the ministry of steel.
ICRA Senior Vice President Jayanta Roy said despite an upward trend, domestic iron ore prices are at a significant discount to international prices.
Iron ore, along with coking coal, accounts for about 75 per cent of the input cost of steel. Coking coal prices have been volatile over the past year because 70 per cent of the steel industry’s requirements are met through imports. Spot coking coal prices had increased from $90 a tonne last July to $310 towards the end of 2016 and are now around $160 a tonne. The increase had compounded problems for steel companies. Read More…