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| Steel makers to negotiate lower coking coal rates | |
| Jayajit Dash / Bhubaneswar March 26, 2009, 0:16 IST | |
With the Japanese steel makers reported to have secured annual long-term coking coal contract for 2009-10 from BHP Billiton at about 60 per cent less than the last year's prices, the domestic consumers of coking coal expect to clinch a similar deal with their international suppliers within a couple of weeks.
Ennore Coke, a domestic manufacturer of metallurgical coke, is negotiating with global suppliers. "We are in talks with our international suppliers such as Rio Tinto and BHP Billiton to secure annual contract for semi-soft coking coal at $115 a tonne.
The spot prices of premium hard coking coal in the international market are currently in the range of $125-130 a tonne and semi-soft coking coal is priced at 20 per cent less than that of hard coking coal," Ganesan Natarajan, president and chief executive officer, Ennore Coke, told Business Standard.
At present, the coking coal requirement of Ennore Coke stands at 720,000 tonnes per annum. The company has reserves of about 0.4 million tonnes of low-ash coking coal imported from the US and it needs around 30,000 tonnes per month to meet its requirement for 2009-10.
Nippon Steel Corporation and JFE Steel Corporation are reported to have clinched the annual contract, beginning April 1, with BHP Billiton for hard coking coal at about $130 a tonne, which is about 60 per cent less than the price paid by the Asian steel makers in 2007-08.
The average price of coking coal in the international market jumped from $96 a tonne in 2007 to around $300 in 2008. Steel makers are now seeking lower prices owing to falling steel prices and lower demand for raw materials such as coking coal in the wake of the prevailing global downturn.
Last month, prices of coking coal in China were ruling around $130-150 per tonne. Australia-based Macquarie Group, a global provider of banking, financial and advisory services, has forecast a benchmark price of coking coal at $110 per tonne for 2009.
In the domestic market, the steel makers procuring coking coal from Bharat Coking Coal (BCCL), a subsidiary of Coal India (CIL), were yet to negotiate for lower prices. However, a breakthrough on this issue was expected within a couple of weeks.
When contacted by Business Standard, Tapas K Lahiry, chairman and managing director, BCCL, said, "The domestic steel makers are yet to approach us on coking coal prices for the next financial year. At present, BCCL is supplying washed coking coal at Rs 6,300 per tonne and raw thermal coal at about Rs 1,200 per tonne."
In 2007-08, BCCL had revised the price of washed coking coal from Rs 4,500 to Rs 6,300. According to industry estimates, BCCL meets about 20 per cent of the coking coal requirement of Steel Authority of India (SAIL).
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