The primary mills of India did not shy away from the imported coking coal market in May-Jun’21, despite prices spiralling up on supply squeeze. SAIL remained the most consistent buyer too across Jan-Jun’21.
Strong appetite for higher grades
Data maintained with SteelMint reveals that biggies like SAIL, Tata Steel, JSW Steel, RINL and JSPL were steady buyers for the higher grades in these two months.
Hard coking coal: For instance, SAIL, Tata Steel, JSW Steel, RINL and JSPL picked up 2.94 mn t cumulatively in May-Jun’21 of hard coking coal (HCC).
Although the volume dropped if compared to the 3.94 mn t bought by these same mills in Mar-Apr’21, importantly, it indicated, the buying trend had not exactly waned, despite the elevated price levels.
HCC is the most sought-after category with 15.48 mn t share in the total 29.12 mn t of coking coal imported in Jan-Jun’21 as per data available with CoalMint.
India: Grade-wise Coking Coal Imports
Premium hard coking coal: Where the benchmark premium hard coking coal (PHCC) was concerned, JSPL was, however, the sole buyer with 0.16 mn t in June. SAIL had bought a tranche of 0.42 mn t in April while Visa Steel picked up 0.03 mn t in May. Tata Steel and JSPL both had bought 0.32 mn t and 0.08 mn t respectively in Jan’21.
Semi-soft coking coal: However, all the biggies showed enough appetite for the semi-soft coking coal (SSCC) variety, buying 2.03 mn t in May-Jun’21 against 1.30 mn t seen in Mar-Apr’21. The buyers included SAIL, JSW Steel, RINL, Tata Steel and Vedanta.
The PHCC factor: Why did prices rise?
It may be recalled that the benchmark and priciest PHCC, went up 33% and 52% in May and June respectively while the HCC mid-vol gained 24% and 42% over the same period compared to the Mar-Apr’21 prices.
Prices escalated because of a supply squeeze from Australia.
PHCC import volumes reduce: Importantly, the data reveals that PHCC import volumes have reduced steadily from 0.88 mn t in Jan’21 to 0.24 mn t in Jun’21, although these touched 1.11 mn t mid-way in Apr’21 — when prices had ruled low at around $134.6/tonne FoB.
The PHCC is mainly supplied by BHP, a mining giant, which, seeing prices heading south from Feb’21 onwards, had put some of its mines under maintenance.
This disrupted supplies and had an impact on May-Jun’21 shipments. As a result, PHCC prices escalated, pulling up the other grades too. Therefore, the mills had to make do with whatever grades were available in these two months. Demand for SSCC rose in the process.
Outlook
There is a restocking requirement but traders say it is a price-sensitive market too. If the mills have sufficient stock of the premium grades then they may buy more of the lower Russian variety to blend with the existing stocks to reduce the cost of production.
Data reveals that lately Russian volumes have gained traction from nil in May’21 to 44,000 tonnes in Jun’21 to a whopping 0.26 mn t in Jul’21.
This trend may change, however, once Australian prices correct and supplies touch prior levels.
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