Coking coal is expected to get costlier next year. However, the Indian steel fraternity is likely to absorb costlier input costs in view of better demand.
“Coking coal is a raw material that India’s top steel producer and state-owned firm SAIL depends largely on imports for meeting the requirement”, a leading consultancy PwC’s Global Leader, Goldsmith said to the media.
He added that “It is difficult to estimate the price of coking coal, because of the uncertainty of how much coking coal China is going to produce. Even so, I think you can see coking coal has less new production coming on stream next year. So there is a chance of an increase in the coking coal price as well.”
SAIL is paying its Australian coking coal suppliers USD 148/MT for October-December quarter, a USD 6/MT higher than the contracted price in the previous quarter.
“So if you have a steel mill, you should be looking with a little of nervousness, because your cost input will go up… It was really tough for the steel industry to pass the higher input cost on to the customers in last two years,” Goldsmith said.
Apart from above, SteelMint also noted that Australian spot coking coal prices are continuously slipping since October, 2013. Australian Hard Coking Coal (VM 25.5%, Ash 9%) prices have slipped by 7.9% in the last two months and Australian Hard Coking Premium Coal (VM 21.5%, Ash 9.3%) prices have slipped by 9.1% in same period. Whereas, US Hard Coking Coal (VM 19%, Ash 8%) has slipped by only 2.9% during Oct-Nov period in the current year.