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Faced with Chinese dumping, met coke manufacturers have raised an alarm of a potential threat to Rs 15,000-crore worth of bank exposure to the sector. Calling for an increase in import duty on met coke to at least 20 per cent, the Indian Met Coke Manufacturers' Association (IMCOM) expressed concerns over dwindling plant utilisation and increasing imports.
Even as the consumption has remained stagnant for the past three years, India's met coke imports have increased. Arun Kumar Jagatramka, CMD of Gujarat NRE Coke Ltd, and secretary, IMCOM informed that India's met coke import may double this year as against last year.
"Last year we imported about 2 million tonnes of met coke. This year, in the first six months, met coke imports have touched 2.2 million tonnes. This shows our imports will double this year" he told media persons in an interaction here.
Jagatramka demanded raising import duty on met coke to at least 20 per cent from the current 2.5 per cent. The association has already made representation at the Central government and is waiting for the budget announcements on the same.
China, which had imposed 40 per cent export duty on its met coke exports till December 2012, completely removed it thereby opening the doors for Indian importers with cheaper met coke. At present rates, domestic met coke is $ 40 per tonne costlier than imported met coke. This prompted many steel companies to turn to China.
India's overall met coke consumption, mostly by steel companies, has remained stagnant at around 35 million tonnes per annum, out of which about 20-25 million tonnes per annum is the captive capacities, which are unaffected by imports. However, rise in imports indicated that demand for domestically produced met coke has declined.
"The installed capacity of merchant met coke is about 10 million tonnes per annum, but plant utilisation has declined to about 30-35 per cent across the sector. This is affecting the earnings and there is a potential threat to the bank exposure worth Rs 15,000 crore to the sector," he said. The total investment made in the met coke facilities is worth Rs 30,000 crore.
Jagatramka also expressed concerns that with increase in imports, plant utilisation of met coke will fall further. "Most of the manufacturers including Gujarat NRE have gone for debt restructuring (CDR). In such scenario, plant utilisation may further fall and pose a challenge for the industry," he added.
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