Coking coal supply situation in India

Coking coal supply situation in India

The shortage of coking coal worldwide is showing its impact on the Indian iron and steel industry as well. The major state owned steel makers of the country Steel Authority of India Ltd. (SAIL) and Rashtriya Ispat Nigam Ltd. (RINL) are also experiencing the same problem. As a result of the force majeure situation at their Australian coking coal suppliers, both steel producers are running on stocks and have only left a ten days inventory. For sure, this situation is putting their steel production under threat, as the coking coal supply by Australian MIM Holdings and Anglo American who have enforced force majeure are cut. Currently the supply by BHP Billiton only continues. The two state owned Indian mills source their 70% feedstock requirement from these Australian suppliers. Particularly now, when the market conditions are in an uprise with demand from almost everywhere accompanying with increasing raw material and transportation costs, to be left without coking coal constitutes a big problem for the mills. The industry reports state that the force majeure situation should not be expected to end before two months. SAIL authorities however emphasize that they are running on normal production levels, while at the same time looking for alternative suppliers on the spot market to avoid any production cut. There is no doubt that such shortage have caused coking coal prices to skyrocket. In India, the imported coking coal is primarily used by the state owned mills and is approximately 15 million tons annually. In line with this, Tata Steel, a private steel producer, is not influenced by this shortage at such threatening levels as it is running its own mines is not as dependent as the state owned mills on the imported material. The annual production of Tata Steel is around 4.5 million tons. All mills involved in the Indian steel industry confirm that they do not see China as a credible supplier, for internal consumption is currently on the rise. The quality of Chinese material is also another concern.