Domestic steel producers reluctant to lower prices

Domestic primary steel producers are reluctant to lower product prices for the coming month even after NMDC, the country's biggest iron ore miner, reduced ore prices last week to bring them in line with the global trend.

NMDC, last week, reduced prices of iron ore fines by 20% and lumps by 6.1% for 62% ferrous grade.

"We are not going to revise steel produce prices for next month," said a top official with state-owned Rashtriya Ispat Nigam. "Our prices are not-too-high and are very much in line with the market. So no plans to lower product prices," he said.

Prices of iron ore fines are reduced by Rs 500 per tonne to Rs 1,960 per tonne and lumps prices are reduced by Rs 200 per tonne to Rs 3,050 per tonne. Earlier this month, NMDC had rolled over the prices of March to April.

"The price revision by NMDC has come in late. This reduction should have happened earlier," said a source from Essar Steel. "We will take a call only early next month, but am not sure if there will be a revision," he added.

"It is too early to say if there is going to be price revision. We usually take a call early in the month," said a source at Tata Steel. Though Tata Steel's margins remain squeezed due to lower steel prices, the country's oldest alloy producer seems to have got some relief from buying overseas ore after the new mining law was brought in.

Tata Steel imported almost five million tonnes in FY15, the overhang of some which is still going on, T. V. Narendran, managing director, India and South East Asia had told Business Standard in an interview.

Most industry officials were of the view that due to weak domestic steel demand, products are already priced low and so a further cut in prices looks difficult.

"Don't see steel price cuts now, prices are already so low, if they are lowered further, companies will run into losses," said a source from Steel Authority of India.

Calls made to JSW Steel went unanswered. Sajjan Jindal-led JSW Steel has no captive source of ore and relies completely on NMDC to run its Karnataka plant.

Meanwhile, NMDC plans to keep its focus on better availability of ore in the domestic market and hence is planning to increase its production by 14 million tonne this year, taking the total production to 46 million tonne.

Last year, domestic steel majors such as JSW Steel, Tata Steel and Essar Steel imported iron ore. This year too some companies may continue their imports to make use of the availability of high quality ore at a lower cost, said industry officials. Internationally, iron ore prices, are ruling at $49-51 per tonne CFR China basis.