 "Coal India taps rising coking prices to woo steel sector")
With volatile global coking coal prices straining the balance sheets of steel companies in the country, Coal India is planning to put up more coal for e-auctions.
Even as global coking coal — also known as metallurgical coal — prices crossed the $190-a-tonne mark recently, Coal India decided not to increase its prices, to remain competitive and become a substitute to imports.
Coking coal constitutes a third of steel sector’s total costs. The festival season, Coal India will put up 20 million tonnes (mt) coal for e-auction, where both the regulated and the non-regulated sectors, including traders, will be able to participate.
“We are devising plans whereby we will channelise the coking coal variety towards the steel sector,” a senior Coal India official told Business Standard.
In May this year, Coal India reduced the prices of its G1-G5 grades for the non-power sector by 15.61 per cent on an average, while increasing the price for the remaining grades by 3.47 per cent on an average.
If the entire quantity offered for e-auction is taken, about 60 mt coal would be sold under this method till date this financial year, compared with 79 mt sold in entire FY16.
Even as global coking coal — also known as metallurgical coal — prices crossed the $190-a-tonne mark recently, Coal India decided not to increase its prices, to remain competitive and become a substitute to imports.
Coking coal constitutes a third of steel sector’s total costs. The festival season, Coal India will put up 20 million tonnes (mt) coal for e-auction, where both the regulated and the non-regulated sectors, including traders, will be able to participate.
“We are devising plans whereby we will channelise the coking coal variety towards the steel sector,” a senior Coal India official told Business Standard.
In May this year, Coal India reduced the prices of its G1-G5 grades for the non-power sector by 15.61 per cent on an average, while increasing the price for the remaining grades by 3.47 per cent on an average.
If the entire quantity offered for e-auction is taken, about 60 mt coal would be sold under this method till date this financial year, compared with 79 mt sold in entire FY16.
An official in Coal India said companies like Tata Steel and SAIL were keen to buy domestic coking coal in wake of rising international prices. Following the meeting, Coal India made a one-time offer of 20-mt coal under Special Spot e-auction system.
“Such auctions are likely to rise in the coming days if we want to cater to the requirements of the steel sector,” a senior Coal India official said.
In February this year, the Cabinet Committee on Economic Affairs decided that coal linkages or long-term fuel supply agreements (FSA) to the non-regulated sector, which includes steel, cement, and aluminium industries, will only be given through e-auction mechanism.
A company official said the e-auction route will be followed for all future contracts once the existing FSAs lapse. Although the FSA for the public sector units will be renewed, additional requirements can only be met by the e-auction system.
India’s coking coal imports remained flat at 43 mt in 2014-15 and 2015-16. Steel companies imported 6-mt coking coal in April and May, according to coal ministry data.
Additionally, Coal India is also keen to maximise production of coking coal and is on the lookout to acquire offshore assets in South Africa, Indonesia and Australia. “The coking coal variety is scarce in India and hence we need to look internationally to acquire assets for this variety of coal,” the official, quoted earlier said. During April-September, Coal India produced 230.06-mt coal of which coking variant comprised less than 10 per cent.