National Mineral Development Corporation Limited (NMDC), India’s largest iron ore producer and exporter, had decided to reduce its iron ore prices which coincidently collided with their sales release and production data of quarter ended June, 2013. The reduction of iron ore prices were by 4-4.5% owing to the falling value of rupee against USD and weak demand in the global market. The production of iron ore in June had risen up by 5.8% in last year’s quarter ended but this year it has declined by 11.9%. In April-May, steel production had grown by 3.1% but the actual consumption decline by 0.8%.
Price decline of iron ore in the global market and weak demand for the material from Europe and China causes decision of price reduction of iron ore in the domestic market by NMDC. The Chinese imported iron ore fines of 62 grade have also declined by 15.1% in the first quarter of FY 14 in comparison to the march quarter of FY 13.
The future for NMDC does not appear to be much bright as per the sources. Demand for domestic steel depends on other sectors such as real estate, automobiles and infrastructure. If they get a good demand in the market, the demand for steel would be revived automatically. Thus it builds a pressure on the prices of iron ore and continuous decline in the prices are witnessed.
However, NMDC has future plans of expansion towards the end of 2013. If they run according to the planned schedule, they are soon going to be back on track once again. Although price rate is not into their favor since past few quarters, yet they expect a high volume and revenue growth.