Unexpected Price surge in Coking coal tests business ethics, Jindal and X-Coal in dispute

10 April 2017

Coking coal prices moved up unprecedentedly with their biggest price surge of all time as rail outages because of cyclone Debbie halted Australian coal exports. CFR India Coking coal price was quoted at 280$ but believed to cross 300$ in this week. The supply disruption is expected to last 3-5 weeks with Goonyella as most affected brand in this episode.

Production loss because of this cyclone is estimated at around 15 million tons and approx 2.5 Billion $ worth at pre-cyclonic market price.

This sudden spurt has put business ethics on fire test as several deals are under renegotiation or cancellation phase. As per KATM source Jindal Steel is having difficult time negotiating with X-Coal and few other suppliers. JSPL had a Panamax contract of  riverside coal with X-Coal, USA but is learned to be diverted to Rotterdam. Our call to Xcoal went unanswered while Jindal’s representative said that almost all the parties are honouring the contract while few parties are trying to take opportunistic advantage. However they are trying to settle matter amicably with X-coal before taking any legal course of action as this diversion was without any prior information to them. Similar renegotiations are being heard in industry with few more suppliers. Definitely this is high time when not only all the steel producers and specially Indian manufacturers need to find their trustworthy partners and look for alternate source of supply rather than over depending upon Australia.