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Iran iron ore miners seek higher prices

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Fines/Lumps

BigMint Bureau

945 Reads

2 Jul 2020, 18:04 IST

Major Iranian iron ore producers have sought an increase in prices of iron ore though steelmakers have pushed back against any increase in prices.

In a recent meeting with the Ministry of Industry, Mines and Trade, major iron ore miners, including Gol Gohar Mining, urged the government to increase the prices of iron ore by changing the pricing coefficient. Gol Gohar accounts for 43% of the total iron ore produced in Iran.

Changes in prices may be declared next week, said a source in the Iranian mines ministry

Iran posted a 4% rise Y-o-Y to 47.31 mn t of iron ore concentrate in the previous Iranian calendar year (Mar'19-Mar'20).

The country extracted 64.27 mnt of iron ore during the past calendar year.

According to the current pricing coefficient, raw materials are priced at a certain percentage to domestic billet prices. Iron ore fines and lump are priced at 7.5% on domestic billet price, concentrates are priced at 16%, pellet at 23% and DRI at 50%.

Now, the miners are urging to increase the coefficient for iron ore fines/lump to 9.5%, concentrate at 21%, pellet at 27% and DRI at 53%.

Steel mills want price coefficient unchanged

The Iranian Steel Producers Association (ISPA) has written a letter to the deputy minister of the Ministry of Industry, Mines and Trade, requesting them not to change the coefficient as this may lead to an increase in prices of steel products.

ISPA said the root cause of mining companies' dissatisfaction regarding current iron ore prices has resulted not due to unfairness of the current iron ore pricing coefficients but rather due to billet prices being unrealistically low because of government's price control policies. Any change in the coefficients would definitely affect the cost of the entire steel supply chain, said ISPA.

Major steelmakers like ESCO and MSC also supported the ISPA on the iron ore pricing issue.

The current coefficient which governs the entire steel chain is perfect and it shouldn't be changed as the coefficient is based on fair profit of the entire steel chain, said Reza Yazdkhasti, deputy purchase manager of MSC.

If the current coefficient changes and the price of iron ore increases, then ESCO might not be able to afford the extra cost and steel would no longer be able to support other industries, said Mansour Yazdizadeh, managing director of ESCO.