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Iron ore e-auctions: High prices dater major steel mills

Major steel producers, including JSW Steel and Kalyani Steel, showed little interest in buying iron ore during the fourth round of e-auction due to a massive increase in prices.

Prices went up by 45-50 per cent during the two-day auctions that ended on Saturday and touched a high of Rs 3,900 per tonne, against the base price of Rs 2,750. The Supreme Court-appointed monitoring committee had facilitated 876,000 tonnes of iron ore with a Fe grade of 55 to 67 per cent for this round of auction. Steel companies picked up 364,000 tonnes, or 41.5 per cent, of this. About 232,000 tonnes were sold yesterday and the remaining on Saturday. Of the total 364,000 tonnes, 44,000 tonnes came from NMDC. JSW Steel, Kalyani Steel, Mukand Steel, BMM Ispat and MSPL Ltd were the major buyers.

Iron ore-starved JSW Steel, which requires 45,000 tonnes of the material a day to run its 10-million tonne steel plant at Toranagal in Bellary, picked up just 76,000 tonnes. The largest steel producer in Karnataka has so far bought 1.92 million tonnes of the ore.

Kalyani Steel managed to buy 20,000 tonnes. Till now, it has managed to buy 225,000 tonnes. But due to procedural delays, it could manage to transport 25,000 tonnes to its 700,000-tonne steel plant in Hospet, R K Goyal, managing director, Kalyani Steel, said.

“The prices of high-grade iron ore have hit a peak of Rs 6,800 per tonne, showing a rise of about 80 per cent, during the auctions, as buyers were desperate to buy ore. However, transporting the ore to our steel plant is still a big problem, as the department of mines and geology is still to fast-track the process of issuing e-permits,” Goyal told Business Standard. With the completion of the fourth round of auctions, the steel industry has managed to get close to 3.7 million tonnes of iron ore. The auctions started on September 14. The committee had fixed the base price at Rs 2,750 per tonne for 60 and 61 Fe grade iron ore fines, with Rs 100 less for a drop in every grade.

The committee had plans to auction four million tonnes during October. During the last two days, the National Mineral Development Corporation (NMDC) made available 592,000 tonnes of iron ore from its Kumaraswamy Mines in Bellary. At the auctions held on October 4, NMDC had made available 200,000 tonnes. It requested the committee to double the number of auctions per week, so that piling up of iron ore could be avoided. NMDC produces 20,000 tonnes of iron ore a day from its two mines in Karnataka. It has plans to increase it to 30,000 tonnes once it clears off its inventories.