Coking coal cargo through major ports in India till the end of Oct’16 showed a downtrend despite overall spike in imports by the country. Total coking coal shipments at the major ports fell marginally in the April-October period of this fiscal at 28.58 MnT compared to 28.79 MnT in the year-ago period.
Major ports at Haldia, Kolkata, Paradip, Visakhapatnam and Jawaharlal Nehru Port Trust (JNPT) recorded decline in coking coal cargo volumes.
Coking coal is a key ingredient in steel making. Indian steel producers import an overwhelming quantity of their coking coal needs due to supply constraints in the domestic market. Tata Steel and JSW Steel are the leading imports of this crucial steel manufacturing input.
India’s coking coal import is likely to rise by 5.7% to 46 MnT, a record, in FY17. There has been a sharp increase in demand from steel mills, which have scheduled the commissioning of 6.7 MnT of additional output capacity. Last year, coking coal import growth was flat, at 43.5 MnT. An ICRA report estimates 46 MnT of imports for FY17 and 49.2 MnT for FY18.
Of late, international coking coal prices have gone through the roof. Price of top quality Australian coking coal touched a high of USD 300/MT last week.
The extraordinary rally around coking coal has been built on a range of coal supply cuts and interruptions that have made it much harder to source coal shipments.
The biggest factor has been China’s decision to limit the number of days that its domestic coal mines can work each year but heavy rains, mine interruptions and derailments at some major coal mines in Australia have also fuelled the unexpected spike in prices.
The price rally has come after several years of sliding prices and cost cutting by miners, which means these prices are being achieved with cost bases that are dramatically lower than during the boom years between 2005 and 2012.
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