Monday,February 07,
Contract prices for coking coal likely to shoot up in next quarter as supply side constraints in Australia’s flood ravaged Queensland provinces.
Bad news for Indian producers, heavily dependent on Australian imports. Analyst predict coking coal prices for the next quarter could move up to $340-400 per/MT. Spot prices are currently around $380/MT, up from $249/MT last month.
Increased prices will eat into steel players margins compared to January – march quarters, as increased spot prices could result in higher contract rates for the quarter. Producers note the margin pressure was evident in third quarter results. While coking coal prices increased 20 per cent during October-December steel prices increased 13%.
Then there’s Cyclone Yasi which hit Australia last week has washed up on Indian imports. Steel producers have already increased prices by 3-5 % which will consequently hit the construction and automobiles industries.
“Not only will some sectors be adversely affected due to the rising prices, there will be a snowball effect on other sectors as overall costs rise “said Sushil Maroo, direct and Group CFO, Jindal Steel & Power.
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