Cyclone Debbie may hurt steel companies

KOLKATA: A 90% surge in coking coal prices, triggered by Cyclone Debbie, threatens to sting steel companies at a time when they are planning to run their factories at full capacities ahead of the monsoon season. Prices of the key steelmaking input jumped to $283 per tonne with a single-day spike of 34% last Friday, sending alarm bells ringing across the domestic steel industry.

India's total imports of coking coal is estimated to be around 46 million tonnes in 2016-17, powered by rising steel production at Tata Steel and JSW Steel, according to a Moody’s report. With measures in place for protection against imports and government steps to boost infrastructure, Indian steelmakers are looking at operating at full capacity.

"Prices have risen by almost $100 per tonne and this is likely to continue for two more weeks. This will have an impact on the domestic steel industry," said Vinod Nowal, deputy managing director at JSW Steel. This also highlights the dependence of Indian steelmakers on imported Australian coking coal. The global sea-borne trade in coking coal is estimated at nearly 300 million tonnes, with the biggest buyer being China.