Signs of India Slowdown: Odisha Mining Corp Cuts Iron Ore Price

Weak demand in the 2nd quarter of the year due to poor domestic and international uptake has forced one of the leading iron ore miners in India, the Odisha Mining Corporation (OMC), to err on the side of caution and slash the price of sized iron ore for the July-September 2013 quarter by 18 percent.

Analysts here said demand for sponge iron and pig iron in particular has been quite sluggish. Sized ore having 62% iron content will be priced at approximately US $70 per ton, much lower than $85 a ton priced in the April-June period. Iron ore of 65% grade was fixed at the $86-a-ton rate against the previous rate of US $106 per ton.

OMC sells about 500,000 tons of iron ore every quarter from the Koira region of Odisha State in eastern India.

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According to a report in The Business Standard, the OMC had slashed iron ore rates from the Barbil and Gandhamardana sectors by as much as US $5 a ton to US $63 per ton. These ores can be directly used in blast furnaces to produce pig iron. According to analysts, weak price trends of sponge and pig iron had adversely affected the OMC rates this time.

Not only government-owned mining bodies, but even private miners have also slashed iron ore rates coinciding with global cues. Essel Mining and Rungta reduced pig iron-grade iron ore by about US $5 a ton due to sluggish demand.

In a totally unrelated move, but one which could have also been motivated by the lack of demand for sponge iron, one of India’s private steel manufacturers Jindal Steel & Power Limited said it would double its iron ore pelletizing capacity in Odisha to 9 million tons a year by end-2013.

More on Jindal Steel in Part Two.

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Read more Indian perspectives from Sohrab Darabshaw.

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