Australian storm may fuel steel price hike in India

With the price of coking coal doubling in the past 10 days, steel in India is set to become dearer.

Coking coal is now priced at $300 a tonne — and expected to rise further — after Cyclone Debbie wreaked havoc at major mines and ports in Australia late last month, disrupting exports from that country.

As per the latest estimate, shipments of 13 million tonnes of coking coal from Queensland, accounting for 50 per cent of the global coking coal supply, is expected to be delayed. Over 32 large vessels are waiting in queue to load coal from the ports, which are limping back to normality.

Nearly all major steel makers in India import most of their coking coal from Australia, which is the biggest exporter of the key raw material.

Jayant Acharya, Director (Commercial & Marketing), JSW Steel, said that while the company is arranging for coking coal from other countries, managing the cost and time will be a major issue.

JSW Steel, which depends entirely on imported coking coal, manages an inventory of 60 days between high sea, port and plant.

It should take at least two months for Australia to regularise coking coal exports, he said.

Demand revives

Interestingly, prices of coking coal from other countries such as the US, Canada and Mozambique have begun rising, in sync with rising coking coal prices in Australia.

Steel companies are likely to pass on the increase in coking coal prices to consumers as demand has begun improving after the lull following demonetisation.

Moreover, steel prices across the globe are expected to go up with the rise in input cost.

Courtesy : www.thehindubusinessline.com

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