While the Indian government has been seeking to mitigate the consequences of exorbitant prices, its trade amendments imposed recently have caused serious dissatisfaction among steel market players, in particular, those dealing with coking coal and coke. Accordingly, most sources interviewed by SteelOrbis are concerned that the imposition of 15 percent export duty on finished steel will offset the positive impact from the reduction of import duty on coking coal and coke, from 2.5 percent to zero and from five percent to zero, respectively. “Coking coal duty was merely 2.5 percent. That is irrelevant at current prices, while the impact on steel prices is huge. Domestic steel prices are 7.5 percent lower compared to import prices. With the export duty, domestic steel prices are going to collapse. Coking coal prices should normally fall as Indian steel drops over the medium term. Metallurgical coke plants are closing down across the country unless they are integrated. It is a disaster for the Indian steel industry,” an official at an Indian steel mill stated. “I am looking to get rid of coal shipments,” an importer of coking coal said, echoing the concerns regarding the future of the segment.
“A slashing of import duties will definitely lower production costs. Moreover, the imposition of 50 percent export duty on iron ore and 45 percent on pellets will also have an effect. There will be apparently more material available in the market for domestic consumers, which in turn will trigger a reduction of prices, for raw materials, in particular,” an Indian trader commented.
Specifically, local met coke prices in the eastern region of India have already seen a decline. On balance, offers for blast furnace (BF) coke (64% CSR, 25-90 mm) have decreased from INR 54,000/mt ($700/mt) ex-works in early May to INR 53,000/mt ($683/mt) ex-works now. Meanwhile, anthracite coal in India is said to be offered at INR 29,500/mt ($380/mt) ex-works.