Increase in coal prices puts pressure on Indian steel industry

Increase in coal prices puts pressure on Indian steel industry

Coal India (CIL) has recently decided to increase coal prices by an average of 16.6%. The decision of CIL now creates concern among steel producers in India as it will lead to increase in cost of steel production by Rupees 250-300 per ton ($5.5-6.5). The exact prices have not been revealed yet. The price increase will not affect Jindal Steel & Power, Monnet Ispat and Tata Sponge & Iron as they have their own mines however it will have an impact on steel industry in general. 50-60% of the cost increase will be reflected to sponge iron plants and the rest will be reflected to the customers. It is reported that five major hot rolled coil producers in India; Steel Authority of India Ltd (SAIL), Tata Iron and Steel Corp (TISCO), Ispat Industries, Essar Steel and Jindal Vijaynagar have recently demanded government to restore previous coal prices as steel industry will be negatively impacted from the increase in coal prices.