Meeting on Iron Ore Pricing Formula on Monday - Indian Steel Secretary

The union government of India has scheduled a high committee meeting for deciding domestic iron ore pricing formula on Monday, said Dr Aruna Sharma, steel secretary, Indian government, on sidelines of BIR (Bureau of International Recycling) conference that took place today in New Delhi.

The union government has dropped the proposal to cap prices but is yet to derive a pricing mechanism for the raw material which is simpler and fair for steelmakers, she further added.

Some of the mining companies are pitching for a benchmark price for the raw material on the lines of oil and coal. While source said capping the price may not happen also, but in order to ensuring that the iron ore prices remains as competitive as possible for steel makers, government may benchmark the price.

The iron ore production witnessed significant growth in FY17. India's iron ore production is expected to cross 190 MnT compared to 155.9 MnT in previous fiscal. Iron ore exports from India jumped fourfold amid higher global prices and was recorded at 24.35 MnT in FY17 against 6.04 MnT in previous fiscal. Imports to India remained stable in FY17.The move, according to analysts, amounts to a throwback to the history when prices of many industrial products were regulated. Steel prices in the country are not regulated though.As reported by SteelMint earlier, iron-ore accounts for only 10% of the cost of steel-making for SAIL and Tata Steel which have 100% captive iron-ore, while in case of others like JSW Steel and Essar steel, which buy the raw material from the open market, the cost could be around 20-25%.

It generally takes 1.6 tonne iron-ore to produce one tonne of iron. India had produced around 97 MT steel last year; however, more than half of it was through the induction furnace route, which does not require iron-ore as raw material.