CIL to maintain same domestic coking coal price

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24 October 2016

Coal India Limited (CIL) has decided to maintain its domestic coking coal prices to liquidate stocks and offer an import substitution window to local steel producers, as international coking coal prices surge. The announcement comes as a big relief to the Indian steel industry. India Imported around 44 mt coking coal in last FY.

By maintaining prices of domestic coking coal, CIL expects to woo domestic steel producers who are apparently compelled to book imported coking coal at an average price of $210/t for current quarter deliveries.

Besides maintaining domestic prices, the miner would also ramp up volume to give local steel mills the opportunity to shift to domestic dry fuel.

Most of the extended supply of coking coal to steel companies would be through forward auctions to be conducted by CIL over the next three to four months of the current financial year. In the current round of forward e-auction, which got under way last week with majorly thermal coal, CIL had put on offer 20-million tons.

Earlier this year, Beijing decided to cut the annual working days in mines to 270 days from 330. This cut-down at the time when India’s steel production was accelerating ramped up the coking coal prices which touched $235 last week.

Outlook for coking coal for short term is expected to remain up because many Chinese mills have shut down in want of coking coal shortage and supply disruptions are expected to continue.

Ms. Aruna Sharma, Secretary, Ministry of Steel said recently that Govt is looking at reducing the dependency on imported coal from almost 100% to 60%.  According to the Minister for Power, Coal, New and Renewable Energy and Mines Piyush Goyal, enhancement of coking coal production from 53.8 million t achieved in 2015 – 2016 to 71.77 million t in 2019 – 2020 is one of the key target.