The Hindu Business Line : Steel producers renegotiate prices with overseas coal suppliers

Kolkata, Nov. 20 Steel manufacturers, both in private and public sectors, have started renegotiating coking coal prices with overseas suppliers, mainly those in Australia, in view of present economic slowdown hitting the steel industry.

The contracts signed earlier were at an exorbitant rate, up to $300 a tonne, against $96 a tonne previously, partly due to the steep rise in demand for coal as a sequel to the boom in steel industry and partly due to the weakening of the Australian currency and other factors such as the congestion in Australia’s major coal loading ports. “But such a high price is unsustainable in present situation,” observe steel industry sources.

Australia’s coking coal suppliers have also been urged to stagger shipments. This is because most steel companies are holding large stocks and therefore would like to go slow over coking coal import. For example, SAIL alone is holding a stock of 8.65 lakh tonnes in three ports — namely Visakhapatnam (430,000 tonnes), Haldia (262,000 tonnes) and Paradip (173,000 tonnes) — and another 5.24 lakh tonnes in plants (Bhilai, 239,000 tonnes, Durgapur 93,000 tonnes, Bokaro 83,000 tonnes, Rourkela 78,500 tonnes and IISCO, 30,500 tonnes). The same is true about other steel plants.

“We’ve asked the coal suppliers to help us in the present situation and how they do it is their business,” according to a spokesman for a public sector plant. “The help could be in several forms including long-term credit.”

But then enquiries reveal that the Australian miners, faced with demand recession, have in turn cut down on their production. So our steel producers, having varying degrees of dependence on imported coking coal, prefer to wait and watch how the situation develops.

Meanwhile many of them have taken a number of initiatives such as undertaking major repair work in plants, cutting down on the prices of finished products, offering volume discounts and other measures, to keep their heads above water.

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