In a major relief to the Indian steel industry, iron ore prices have started falling in Chinese markets after the Group of 20 (G20) countries decided to cut steel production to reduce global supply glut.
The benchmark iron ore price in Guangdong, China currently trades at $59.39 a tonne. In contrast, Indian public sector miner NMDC has cut iron ore prices by six per cent to sell lumps at Rs 1,700 a tonne and fines at Rs 1,460 a tonne. For September, however, government-owned NMDC rolled over the price for the third month in a row.
Iron ore price in the world market, however, remained extremely volatile. The prices of steel-making raw material have declined from the level of $70.46 a tonne early this financial year. In June, however, iron ore prices hit the lowest for this year to $48.40 a tonne following weak demand outlook from the steel industry.
Immediately after the G20 countries discussed to curb steel supply glut largely dominated by China, BHP Billiton, the world’s largest mining company, has forecast iron ore price to fall below last year’s low of $38.30 a tonne on new supply coming in from Australia and Brazil. The fall in global iron ore price is set to create pressure on the government-owned iron ore miner NMDC which, according to trade sources, kept its raw material price unchanged for September, the third month in a row.
“Pricing pressure is expected to be harsh on government-owned merchant miner NMDC more than the world market due to increase in supply from Odisha after opening up new mines in the coastal state. Expectations are that JSW and some captive users might get some iron ore linkages in the mining auction scheduled this month, which would reduce JSW’s dependence on iron ore procurement from NMDC,” said Goutam Chakraborty, research analyst, Emkay Global Financial Services.
Global leaders in G20 meeting in Hangzhou G20 summit reached an agreement acknowledging that overcapacity in the steel industry is a global issue.
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