Coal news and updates

SAIL, RINL likely to meet on April 2 to discuss quarterly contracts

26 Mar 2014

March 26: The Steel Authority of India Ltd (SAIL) and Rashtriya Ispat Nigam Ltd (RINL) are likely to meet any day between April 2 and 4 with officials from leading coking coal miners to negotiate prices for the April-June, 2014 contracts, industry sources said.

The meeting has been fixed even as there is no certainty, as of date, on whether at all the Japanese steel manufacturers (JSM) will agree to offers from coking coal miners to enter into monthly fixed priced contracts.

SAIL procures around 11 million tons (mt) of coking coal annually from international miners whereas RINL procures around 3.5 mt of coking coal annually from overseas miners.

The meeting is scheduled to be held between April 2 and 4, but any final contract is unlikely to be signed in view of the fact that the JSM has not yet entered into any deals with the miners.

"SAIL and RINL generally follow the JSM and may sign provisional contracts with the miners because they need coking coal supplies to continue with their production. A final contract may be signed later on once a clear picture emerges over contracts with JSM," the sources added.

The contracts for the January-March, 2014 quarter for supply of coking coal by miners to steel-makers were signed at an average price of around $143 per ton FOB for prime grade coking coal.

However, if at all there are contract for the April-June 2014 quarter, because there are speculations that miners are pushing for monthly pricing, industry sources expect this to be signed at any price between $110 to $120 per ton FOB.

The spot price of prime hard coking coal was quoted at around $134 per ton towards the end of December 2013 when contracts for the first quarter (Q1) of 2014 were signed at around $143 per ton and the current spot price, which had dipped to $107 per ton, is around $108 per ton.

"So, depending on how well the steel-makers negotiate, the contract price could be $110, $115 or $120 per ton and this would result in savings of 16-23% over the previous price of $143 per ton in the January-March quarter," said a senior official with a leading steel-maker.