JSW has taken offence to the pricing methodology adopted by National Mineral Development Corporation (NMDC) as the public sector entity has held its ground on iron ore prices, which pinches the Sajjan-Jindal led company that greatly relies on miners for the key raw material.
JSW Steel claims that NMDC is charging 40% higher for similar quality iron ore fines than private miners in Odisha, which have been consistently reducing prices for three months now. "NMDC was set up to promote steelmaking in India. It has now become counter-productive. This is making us uncompetitive. Already Russians and Chinese steelmakers are dumping cheap steel into India," said Arun Maheshwari, senior VP-commercial, JSW Steel. Right now JSW Steel imports almost half of its iron ore requirement of about 20 mt.
While iron ore prices globally for 62 FE quality iron ore fell 51% in the last one year to about $68.68 (Rs 4218) per tonne NMDC's price for 64 FE iron ore rose 14% to Rs 3,607 per tonne during the same period, according to JSW Steel. Higher FE (ferrous) content demands better prices.
This shift in commodity prices narrowed the gap between high international prices and low iron prices in India, in turn reducing the cost competitiveness of Indian players like JSW Steel. NMDC chairman and managing director Narendra Kothari said, "Yes, there are a lot of pressures. We will review the situation early next week when the pricing committee is scheduled to meet."
Source: ET
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