Tata Steel Long Products (TSL) has placed enquiries for met coke procurement in the merchant market for its newly-acquired Nilachal Ispat (NINL) plant, CoalMint learnt from reliable sources. The company is likely to procure 50,000 tonnes of met coke per month for the next one year as its own coke oven plant has been shut for repairs. The company has placed its requirement for stocking up from May, 2022, since the plant is likely to commence operations in June-July, 2022.
In February, 2022, the Tata Steel arm won the bid for acquiring 93.7% stake in Odisha-based NINL for a consideration of INR 12,100 crore. The acquisition gave TSL access to NINL’s 1.1 million tonnes per annum (mtpa) long-steel producing capacity, 100 mnt of iron ore reserves and 2,500 acres of land. The NINL plant was closed since March, 2020 as the public-sector company was incurring huge losses.
TSL’s inquiries in the merchant market are being considered quite valuable because of the substantial quantity involved, which would give a fillip to demand and support prices for domestic met coke producers.
When asked whether supply fulfilment from imports rather than domestic sources would be preferred, market participants informed CoalMint that considering the undersizing and quality issues of Chinese met coke, it is highly unlikely that TSL would opt for imported material, thus giving an advantage to domestic merchant met coke producers.
“TSL would opt to purchase from 2-3 reputed merchant met coke sellers in the eastern region as any single supplier will not be able to meet this huge requirement,” said a seller in talks with TSL.
Snapshot – India’s met coke market
India’s total met coke capacity stands at around 52 mnt per annum with integrated steel plants’ share standing at around 77% and merchant coke suppliers’ share at 23%. While integrated plants usually import coking coal and convert it into met coke for self-use, merchant met coke producers supply the same to various independent steel and foundry units.
India’s steel production in 2021 stood at around 118 mnt with production via the BF-BOF route at 58% (68 mnt) which means the country’s met coke requirement would be around 30-31 mnt. The country imports only a minimal quantity (around 2-3 mnt) while the rest is met via domestic supplies. The highest importer is ArcelorMittal and the key coke-sourcing country is Poland followed by Colombia.
While China was also a key met coke sourcing destination for India till 2019, it stopped being so from 2020. China’s ban on Australian coal imports made the former rely more on domestic supplies to meet its own steel industry requirement, resulting in reduced export offers from the country.
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