Following up its earlier decision to cap domestic iron ore prices, India’s Ministry of Steel has zeroed in on setting a price band to control price of the raw material, a senior government official said on Wednesday, April 26.
The government official said that the ministry has considered several options to check the volatility of domestic iron ore prices including a “cost plus” formula before finally settling on implementing a price band within which price fluctuations will be restricted.
According to the official, a formal announcement on the pricing regulation will be made next month.
Giving an indication of the price band, the official said that, while it is acceptable that domestic iron ore prices may vary by between 10 percent and 20 percent, high volatility of 30 percent or 40 percent is not desirable in the interest of developing a domestic steel production base in the country.
However, no information or clarity is available on the fate of the iron ore auctions held by various state governments in India whereby steel mills secure supplies through competitive bids, once the price band comes into effect. No information is available either on whether the price band will be applicable in the case of government-owned iron ore miner NMDC Limited.
Previously, the Ministry of Steel proposed setting up an advisory committee for NMDC Limited to look into its periodic price revisions.