Large Indian steel mills are already planning to aggressively increase prices across steel product categories in response to the surging prices of imported coking coal, SteelOrbis has learned from officials at at least three steel companies on Tuesday, October 10.
The fresh round of base price increases will come close on the heels of the two rounds of hikes effected by mills since the end of September.
The officials said that the base price increases would be in the range of $25-50/mt across long and flat products, and the new list prices will be announced within the next few weeks. The latest hike in flat steel product prices was INR 750-2,000/mt ($9-24/mt), as SteelOrbis reported last week.
Sources said that, while the size of increase necessary to offset the rising cost of imported coking coal was “almost decided”, the issue yet to be firmed up is whether to go in for a single large hike or an incremental increase in a calibrated manner to avoid a “shock” to market participants.
Ex-Australia premium hard coking coal prices surged 70 percent from the lowest seen this year in May to $365/mt FOB Australia on October 10 owing to maintenance outages and reduced supplies from mines in Queensland, while Indian mills have been trying to enlarge steel production to cover local demand. After a deal at $360/mt FOB for mid-volatile PHCC from Australia to an Indian end-user, another contract has been rumored at $370-372/mt FOB, though it could not be confirmed by the time of publication. The SteelOrbis daily price has increased by $5/mt since late last week to $365/mt FOB.
Indian mills have assessed that the rise in imported coking coal prices and other costs of production of local mills have resulted in up to $50/mt losses and, despite strong domestic demand from key industries like automotive, construction and infrastructure, producers have not been in a position to absorb the rise in the cost of production and the only option has been to pass it on to consumers, the officials said.