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Lower prices pushed coking coal import up 18% in FY14

Average coking coal prices remained around $111-$118 a tonne throughout year in global markets, sharply lower than $140 a tonne in 2012-13

Indian steel producers imported 33.1 million tonnes of coking coal in 2013-14, an increase of 18 per cent over the previous comparable period, taking advantage of a price slump, said traders and analysts.

Coking coal is converted into coke for use as a fuel to smelt iron ore. Average prices were $111-$118 a tonne through the year in global markets, sharply lower than the $140 a tonne in 2012-13. “The lower rate was the primary reason why imports surged,” said an official of Neelachal Ispat Nigam, a steel billet and pig iron producer in the Kalinganagar steel complex in this state’s coastal area of Jajpur.

However, the rising imports did not all go to steel production. Quite a few plants produced coke out of it to sell to other parties, he added.

With 7.5 mt imports, Mormugao was the largest landing port for coking coal from abroad, followed by Paradip with 7 mts. Visakhapatnam retained the third spot with import of 6.9 mt, data from the Indian Ports Association showed.

India annually buys 30-32 mt of coking coal, mostly from Australia. Home production meets only 10 per cent of the requirement. However, in 2012-13, imports slipped below 30 mt due to higher cost.

The rising coking coal import also reflected an improvement in India’s crude steel output. According to World Steel Organisation data, crude steel production rose five per cent to 81 mt in 2013, compared with 77.3 mt in the 2012 calendar year. However, Indian steel demand rose only 0.6 per cent in the year. Coke traders said apart from using coke to produce hot metal, many plants preferred to stockpile the material, fearing a later price rise.

“When prices hit around $100 a tonne, steel plants just try to increase their stock in anticipation of a future price rise. The rising imports of coking coal and a normal steel production growth indicates steel units have equal focus on production and inventory,” said Ganesh Natarajan, chief executive officer of Ennore Coke.

Global coking coal prices have been under pressure for a year, with China and Japan having reduced their orders.

Source: Business Standard