State-run steel makers SAIL and RINL will get coking coal cheaper by up to $7 (around Rs 370) per tonne from Australian suppliers in the current quarter, a source in the Steel Ministry said.
An Empowered Joint Committee, which sets prices on quarterly basis for the two steel makers, has fixed the rate at $161 per tonne for hard coking coal and $138 a tonne for soft coking coal for the current quarter.
“Prices have been finalised by the Empowered Joint Committee of SAIL and RINL with major Australian coal suppliers for the fourth quarter. The quarterly prices are lower than previous quarter’s prices, by about $4—5/tonne in case of hard coking coal and $7 per tonne in case of soft coking coal,” the source said.
The committee negotiates the rates taking the prices settled by the Japanese steel mills and others as the benchmark. The annual requirement for the two firms is tied up at the beginning of the year and the same is confirmed and received every quarter.
The source said the lower prices could be a boon for both SAIL and RINL to spruce up their bottomline for the fourth quarter, particularly following a lacklustre October—December quarter due to subdued demand for steel in the country.
It generally requires around one tonne coking coal to produce one tonne of steel. The need for iron ore is a little higher at 1.6 tonne.
SAIL, which produced 92.52 lakh tonnes of saleable steel in the first nine months of the current fiscal compared to the corresponding period last fiscal, imports around 70 per cent of its coking coal requirement.
Vizag-based RINL, which has three million tonne per annum steel-making capacity, imports its entire requirement of coking coal.
Hit by higher coking coal prices, sales realisation of SAIL fell by 8.39 per cent to Rs 4,108 crore while that of RINL by 24.89 per cent to Rs 1,147 crore in December 2012.