India mulls steel price hikes on costlier coal

Rising coal prices coupled with a shortage of coking coal and thermal coal are forcing Indian steel mills to consider a steel price hike for the next quarter. Indian steel giants like JSW Steel and Jindal Steel and Power (JSPL) anticipate a cost-driven price hike.

Kallanish notes from customs data that Indian coking coal imports plunged 26.18% on-month to 3.21 million tonnes in September, while iron ore imports fell 35% to 2.32mt. The fall in coking coal imports amid soaring prices, coupled with the expected increase in steel demand during India’s festive seasons, indicates a steel price increase in the coming period.

“The steelmaking-to-energy giant, which relies mostly on imported thermal and coking coal, sees seaborne prices as likely to remain elevated for one or two more quarters,” JSW Steel marketing director Jayant Acharya told local media.

“Coal is having an impact on costs and that will have a bearing on the price of steel for the next few quarters,” he adds. “Benchmark thermal coal prices have more than doubled since the start of the year to more than $200/tonne, with sharp increases in the last few weeks due to a global squeeze on supply.”

The majority of integrated steel plants in India are dependent on thermal coal supply for their power requirement. Owing to supply issues, prices of thermal coal have increased four times above the normal rate, says JSPL.

“A tonne of coal, which was in the range of INR 4,000-6,000/tonne ($53.40-80.10/t), is now costing INR 8,000-12,000/tonne,” JSPL managing director V R Sharma told media.

“Steel in India at present is in the range of INR 50,000-55,000/tonne. The shortage of coal has led to an increase in its prices, which will have an impact on steel that may also go up due to this unprecedented rise,” Sharma concluded.

Sayed Aameer India