OMC’s iron ore pricing behind poor bidding

It may be noted that out of the total auction of 8,76,000 tonne by OMC, only 5,00,000 tonne was booked during the auction.
(Representational Photo)
(Representational Photo)

JAJPUR: High pricing of iron ore by Odisha Mining Corporation (OMC) for long term linkage (LTL) customers has not gone down well with steel and other end-use industries of the State. The Kalinga Nagar Industries Association (KNIA) recently wrote to the OMC chairman attributing the poor response in its most recent auction to high prices. Seeking immediate intervention of the State government to take stock of the situation, KNIA president PL Kandoi said, poor bidding in the auction held on May 19 was due to the high pricing of the iron ore, and appealed OMC to re-auction the iron ore with lower floor price in view of the drastic price hike due to inclusion of export duty.

He opined that though the association forewarned OMC before the auction that the base price for Daitari mines should be Rs 4,500 per metric tonne (MT) of iron ore in view of low product price of direct reduced iron (DRI) at that time (Rs 36,000 per tonne), the floor price was fixed at Rs 5,600 per MT leading to poor bidding. “We are unable to understand why OMC is piling up stocks at mines and not offering a fair price to users which will ultimately benefit both the government and industries,” he said.

It may be noted that out of the total auction of 8,76,000 tonne by OMC, only 5,00,000 tonne was booked during the auction. Steel users claim that ever since the new prices have been fixed, the lifting is low and the end-user industries operations are becoming unviable.KNIA members alleged that amid poor market demand and diminishing product price, price hike of iron ore is only creating a crisis scenario in the dependent industries. Many plants at Kalinga Nagar have already closed down given the challenges faced by iron and steel sector in the State.

Thousands of contractual staffers have been retrenched and livelihood of other workers including truck drivers, helpers etc is also at stake, they claimed.Since the DRI prices have further dropped to Rs 32,000 per tonne and export duty is levied on iron ore, pellets, pig iron etc, it is imperative that OMC conducts re-auction with floor price of calibrated lumpy ore (CLO) at Rs 3,000 per tonne and fines at Rs 2,000 per tonne so that the industries survive and the units are not closed, Kandoi said.

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