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The country's top steel-makers have said they did not foresee shortfall of coking coal due to the flooding in the Australian state of Queensland.
The SAIL Chairman, Mr C.S. Verma, told Business Line that the company has enough coking coal in its inventory and is not being affected by the situation in Australia.
Commenting on the spike in prices because of the floods, Mr Verma said, “Coking coal prices should not be affected for too long. But if the flooding continues for too long then it may affect the negotiations for prices for the next quarter.”
The company requires 14 million tonnes of coking coal and it imports about 10.5 mt.
The world's seventh largest steelmaker and one of the largest private sector steel companies, Tata Steel also said on Monday that it has enough coking coal in its inventory at present. The company sources 40 per cent of its total coking coal requirements from Australia.
However, Mr Koushik Chatterjee, Chief Financial Officer, Tata Steel said today, “We would be concerned if the flooding continues forlong.”
“Coking coal prices have shot up because of the floods. They are hovering around $275-300 a tonne but I don't see this lasting unless the flooding gets worse or remains for a long time. The current spot prices are unlikely to affect the negotiations for the next quarter,” said an official with Jindal Steel and Power Ltd.
According to analysts though, the recent floods in Australia may squeeze coking coal supplies thereby increasing the input cost for the Indian steel makers. Besides iron ore, coking coal is the key ingredient in making steel.
Input costs
“It will definitely increase the input costs for steel makers,” said a Mumbai-based analyst with domestic brokerage. Quarterly contracts for coking coal for Q2 are being signed at $280 a tonne as against $225 for the first quarter, he added.
Australia accounts for some three fourth of India's coking coal imports, which stood at around 28 mt. The worst-ever floods that swamped the coal mines in Queensland, Australia have already ticked off prices, which have hit the $315 a tonne in the spot market. Reports indicate that coking coal output of 11 mt and thermal coal of 3.5 mt has been impacted due to the floods.
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