SAIL to pay $148/tonne to Australian coking coal suppliers in Q3

The company, which has around 14 mtpa hot metal production capacity, imports around 70% of its coking coal requirement from Australia and US

Steel Authority of India (SAIL) has agreed to pay its Australian coking coal suppliers $148 for a tonne for October-December quarter, a $6/tonne higher than the contracted price for the previous quarter.

An Empowered Joint Committee (EJC), which sets prices on quarterly basis for the PSU steel maker, fixed the rate in a recent meeting, a source said, adding the agreed price was in line with the agreement reached by Japanese steel makers with Australian suppliers.

"The price for the imported coal supplies for the October - December quarter was settled at a recent meeting. Quarterly prices for the Australian supplies has been finalised at $148 per tonne which is around $6 per tonne more than the previous quarter," the source said.

SAIL, which has around 14 million tonne per annum (mtpa) hot metal production capacity, imports around 70% of its coking coal requirement from Australia and US. Of these nearly two-thirds come from Australia.

The rest 30% is generated from captive sources.

It generally requires around one tonne coking coal to produce one tonne of steel. The need for iron ore is a little higher at 1.6 tonne.

The EJC, comprising officials from the Steel Ministry and the company, negotiates the rates taking the prices settled by the Japanese steel mills and others as the benchmark. The annual requirement for SAIL is tied up at the beginning of the year and the same is confirmed and received every quarter.

The source said coking coal prices in the international market have seen an rising trend in recent times on the back of increased demand from China and apprehension of supply disruptions during the ensuing monsoon season in Australia.

As on October 1, SAIL had a stock of 3.67 lakh tonnes of Australian hard coking coal. The company produced 7.1 million tonnes hot metal in the first half of the current financial year.

The requirement for coking coal of the company would go up as it completes the ongoing expansion that would take its capacity to 24 mtpa.