Indian Coking Coal Imports rise in January

Indian Coking coal imports have risen owing to new coke plants commissioned by steel manufacturers.

India’s Coking coal imports have increased to 4.5 MnT in Jan’15 owing to increase in coke oven capacities by Tata Steel and SAIL last year. Total Coking coal import was over 33 MnT during Apr’14- Jan’15 and expected to cross 40 MnT this financial year.

Australia, one of the largest Coking coal exporters across the globe, fulfills India’s 80% of Coking coal requirement yearly. Major Coking coal exporters are Australia (27 MnT till Jan’ 15), South Africa (2 MnT till Jan’15) and Mozambique (0.9 MnT till Jan’15).

Falling international Coking coal prices coupled with Chinese slowed demand have led to oversupply in the market. Currently, Chinese buying interest is a nexus between feeble finished steel demand (due to mill output cuts) and running New Year holidays. Persisting market situation has influenced Indian buyers to take advantage of current oversupply and international low prices.

Metallurgical coal prices have fallen from around USD 135/MT to USD 106/MT over the past one year. Several market participants highlighted that the last deal for an Australian premium grade with above 70% CSR was concluded at USD113-114/MT, CFR India.

Rise in Imports largely attributed by SAIL & Tata Steel

Country’s steel giants, SAIL and Tata Steel have large contribution in increased imports. Both the companies had introduced new coke oven plants last year, which might be a major reason behind increased Coking coal imports. SAIL &Tata Steel imports have increased by about 10% and 25% respectively since Aug’14.

SAIL’s import has risen with commencement of 0.88 MnT Coke oven plant in Bhilai (Chhattisgarh). In Apr’14, Tata Steel had introduced 0.7 MnT Coke oven battery at its Jamshedpur unit. Moreover, the company has reduced Met coke purchase from the international market

Coking Coal Imports

Coking coal import started with positive node in FY15 and shows upward movement till July with highest level of 3.2 MnT. Fall in import begun from Aug’14 owing to unavailability of Iron ore in the market because of several mining embargoes in Odisha & Jharkhand.

After Cyclone Hudhud in Oct’14, import increased sharply as pending shipment arrived in November. Import shipment in Dec’14 increased from Australia owing to poor performance of Chinese steel industry and decrease in coking coal import by China. Presently, market is quiet with heavy competition; despite of that Australia always have a competitive advantage because of India’s proximity to China.

Supportive Vessel Freight

Continuous falling global freight rates, which have breached at its 30 years low level, landed some support to importers as well as exporters. Vessel freights have been declined by about 50% from Jan’14-Jan’15.