Bhubaneswar | August 17, 2016: Coking coal imports by Indian steel makers are pegged at 50 million tonnes (mt) in calendar 2016, a 14 per cent increase over 43.7 mnt imported in 2015.

Inbound coking coal shipments are set to go up on the back of revival in the steel industry thanks to favourable factors such as minimum import price and imposition of safeguard duty.

According to analysts, limited domestic availability of the steel making ingredient would fuel more imports.

“Imported coking coal accounted for two-third of the total coal consumption by the steel sector in India. According to the commerce and industry ministry, India imported 43.5 mnt of coking coal in 2015. Considering the limited scope of increase in domestic coal production, India may have increased dependency on imports of coking coal to meet the significant proportion of the demand,” said Pukhraj Sethiya, associate director (mining and metals) at PricewaterhouseCoopers (PwC). India’s crude steel production capacity is estimated at 300 mnt by 2025, a three-fold increase from the present level.

According to the PwC analyst cited above, any increase in coking coal demand would need to be met through imports.

Coking coal prices in the international markets have been declining for the past two years, making imports of the material cheaper and a workable option for steel companies in India. From the level of $216.8 a tonne in 2012, Australian benchmark metallurgical coal contract prices have tanked to $85.6 a tonne in 2016 according to Resources & Energy Quarterly, Office of Chief Economist, Australia. The price outlook is expected to stay subdued and is projected at $78.3 a tonne in 2017, Sethiya added.

Manish Kharbanda, executive director and group head (mines & minerals), Jindal Steel & Power Ltd (JSPL) said, “The revival of steel demand in the country and enhanced capacity utlisation thereof is expected to push up coking coal consumption & will be fueling coking coal imports too. However, a 2.5 per cent import duty on coking coal & a clean energy cess of Rs 400 per tonne is affecting the industry margins significantly especially at a time when the market is highly volatile. Indian steel industry has requested to the finance ministry to abolish the 2.5 per cent import duty on coking coal, a scarce commodity in India.”

To give a fillip to coking coal imports, the Government of India is understood to have initiated steps to cut import duty.

Ranjan Mishra, executive director, Visa Steel, said: “As steel makers look at greater capacity utilisation, they will need to import more of coking coal. Additionally, the Government of India's proposal to lift import duty on coking coal and keeping the commodity out of clean cess will boost imports.”

According to Union commerce and industry ministry and International Energy Agency data, the global seaborne coking coal trade volume was 276.3 mnt in 2015.

(Source: http://www.business-standard.com/)