High coking coal prices are likely to impact gross margins of Indian steel mills, a sector report of India Ratings and Research (Ind-Ra) said on Monday, September 6.
Coking coal prices were up five percent month on month and 103 percent year on year to $222/mt in mid-August.
"Australian coking coal is receiving support from strong demand from Asian countries, ex-China. The limited availability of prompt coking coal cargoes for near-term deliveries due to logistical issues, including freight and container unavailability and high freight rates, could support coking coal prices over the near term," the Ind-Ra report said.
India's coking coal imports at 5.76 million mt in July this year were up 65 percent month on month and 114 percent year on year.
"While steel production has improved, domestic mills had postponed procurements due to higher coking coal prices. However, lower inventories prompted steel producers to import higher volumes in July 2021. A key trend is the preference of Indian blast furnace producers for better grades of coking coal to maximise production yield, considering that freight costs are the same, irrespective of the grade, amid container shortages and higher freight costs,” the report said.