• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager
• BL Club
• Smartbuy
• Books
• Gallery

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Santanu Sanyal

According to Tata Steel’s Annual Report for 2008-09, the company’s Singapore-based joint venture, Tata NYK Shipping Pte Ltd, has entered into a long-term charter for capsize vessels. Two of the vessels are likely to start calling at Dhamra port (Orissa) with Australian coal from next September-October. The commissioning of Dhamra port is scheduled in April-May next year.

Tata Steel couldn’t have chosen a more appropriate time for entering into long-term charters. The shipping market being in dumps, charter rates are low. The steel major’s requirement of imported coal is around 2.5 million tonnes annually. The bulk of this quantity, it is felt, can be handled by two capesize vessels in a year. About 60 per cent of Tata Steel’s coking coal import is routed through Paradip and 40 per cent through Haldia.

The import through Haldia mainly meets the requirement of Hooghly Met Coke & Power Company Ltd (HMPCL), a 100 per cent Tata Steel subsidiary supplying coke to the Jamshedpur plant. HMPCL produces about 1.2 mt of coke annually for which it needs about 1.8 mt of coal, sourced from domestic and foreign mines in almost equal proportions.

Tata Steel will, in all likelihood, have to contract more capesize vessels as and when its crude steel production in Jamshedpur goes up to 10 mt annually. When the higher production, its coking coal import too will rise to an estimated 5 mt annually, double the present level. The plan is to import the whole requirement through Dhamra. Four to five capesize vessels, it is estimated, will take care of the projected import.

What will happen to operations through Haldia and Paradip then? After all, HMPCL’s plant being located at Haldia, the local dock should be the natural choice for routing the imported coal to be used by the plant. The production of HMPCL will be stepped up gradually, with the rise in capacity of the Jamshedpur plant.

According to one estimate, the coal requirement of HMPCL will increase to around 2.5 mt once its production is stepped up to the targeted 1.6 mt. If 50 per cent of the projected requirement of 2.5 mt continues to be sourced from outside the country, more than a million tonnes of coal should still be imported through Haldia. But one is not sure if Haldia will continue to be used, even to import coal for HMPCL.

As the draft condition of the Hooghly worsens, poor navigability continues to be a matter of concern, ruling out the possibility of capesize vessels with full load calling at Haldia. To circumvent the problem, there has to be either two-port unloading – about 70 per cent unloading at Dhamra and 30 per cent at Haldia – or full unloading at Dhamra and coastal transportation of smaller quantities in small vessels or barges to Haldia, depending on the cost.

Meanwhile, Haldia dock authorities are believed to have asked Dhamra port authorities to explore the possibility of barge movement of bulk materials between the two ports. Once Dhamra becomes fully operational, Tata Steel will in all probability skip Paradip for import of coking coal.

Of late, the experience of the private sector steel giant at Paradip has not been too happy. For whatever reasons, there was bunching of vessels, with pre-berthing detention of vessels going up sharply. So much so that Tata Steel had to divert some of the coal ships to Gangavaram.

A smaller bulk-carrier, capable of loading around 30,000 tonnes, was acquired on charter for transportation of the imported coal from Gangavaram to Haldia. This was certainly not the most preferred option as it involved multiple handling and therefore additional costs. But Tata Steel had little choice.

More Stories on : Shipping/Ports | Steel | Tata Steel Ltd | On the move

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Copyright © 2009, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line