Steel Exchange India signed the four year MoU with NMDC to secure long term iron ore supplies. The company disclosed details of the agreement through regulatory filings with the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
Iron ore supply to be secured for four years
The agreement covers the supply and purchase of iron ore fines with an iron content of 61%-63% and above. The raw material will be sourced from NMDC's Buffer Stockpile and Blending Yard facility currently under construction in Visakhapatnam.
Steel Exchange India will be able to use different delivery methods for iron ore supplies, including direct conveyor delivery, FOB, FOR, FOT and delivery from the stockyard. Through this structure, the company aims to gain greater control over the quality and continuity of raw materials used in production.
The initial term of the MoU has been set at four years, while the agreement is expected to provide a framework for long term supply contracts to be signed between the two companies in the future.
Rising Rebar production increases supply requirements
The agreement follows Steel Exchange India's monthly record Rebar production. The company announced that monthly Rebar production increased to 24,823.509 mt following the commissioning of a new reheating furnace.
The increase in production capacity has also increased the company's need for regular iron ore supplies. NMDC's facility in Visakhapatnam is located close to Steel Exchange India's integrated plant in the Vizianagaram region.
The company stated that this proximity will help reduce transportation costs and the time required to deliver iron ore to the plant. The supply agreement is also intended to support Steel Exchange India's production process for its Simhadri TMT brand.
Backward integration strategy
Steel Exchange India considers the agreement with NMDC part of its backward integration strategy aimed at strengthening its raw material supply chain.
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