Via Metal Miner
India has almost replaced China as the most important coking coal export destination for the near future. This comes after a significant increase in steel demand in the subcontinent. The expected resurgence in China’s economy, mainly due to the government’s efforts to kick-start sectors like construction, has not materialized. In response, sector experts are beginning to lose hope where steel consumption is concerned.
In India, on the other hand, the story is one of growth and promise. Indeed, to build almost anything, you require steel. But to make steel, manufacturers require high quantities of coking coal. Therefore, the rising price of this particular raw material seems to have steel-makers in India worried. After all, many steel companies in the country still run on coal-eating blast furnaces.
In fact, steel companies are actively contemplating a price hike for various steel grades. Media reports suggest these increases could be anywhere from U.S. $25 to $50 per metric ton by the end of the year.
India Looking at Other Countries for Coking Coal
Rising coking coal prices from Australia, a major supplier to India, continue to force Indian steelmakers to look elsewhere to meet their quotas. According to a report in The Hindu BusinessLine, coal sourcing from Australia was down 20% to 50% of total imports in the first fiscal months of 2023.
Australia is one of the biggest global coking coal suppliers, but India’s share of imports from this country were down to one of the lowest levels in recent times. Reaching just 17.74 MT in April–Sept 023, this represents an 8% YoY decline. Indeed, premium hard coking coal prices from Australia continue to rise due to limited supply. Prices recently hit around $366 per ton, up 31% over September’s $280 per ton.
Coking Coal Imports From Russia Pick Up
The Indians have also found a cheaper alternative in the form of Russia. Indeed, the BusinessLine report claims that steel companies in India have bought almost thrice the amount of coal from Russia in this fiscal’s first half, around 2.97 MT. The news report quoted Indian steel ministry officials as saying that Russia was now the third largest supplier, displacing Canada and Mozambique.
It’s worth noting that Government-owned steel major SAIL was one of the major buyers of Russian coal. According to this report, it will complete imports of 300,000 tons of coke from Russia by September’s end. Clearly, India’s steel companies find it cheaper to bring in coal from Russia as compared to other nations. This is specifically why SAIL’s top honchos said they were diversifying their sourcing of this crucial raw material.
The LiveMint report also quoted data from S&P Global Commodities at Sea. Surprisingly, it revealed that Indian imports from Russia between May 22 and July 23 this year were actually down to 5.6 million MT from 6.1 million MT of the similar period a year ago.
Still, everyone seems to agree that the cost of coal from Russia compared to other nations, including Australia, made it quite lucrative for Indian buyers. In fact, SAIL was even working with Indonesia and Mozambique to complete its coke requirement.
India’s Increasing Reliance on Green Hydrogen
India remains an attractive destination for coking coal because of increased steel demand. Indeed, most of its steel-producing capacity is based on coal-run furnaces. However, a report by IEEFA India and JMK Research and Analytics says the country continues to gravitate toward utilizing domestically produced green hydrogen for steel manufacturing,
India’s National Green Hydrogen Mission has a stipulated goal to become one of the world’s leading producers. As per the report, as much as 42% of production by Indian steel companies will operate on green hydrogen by 2050. By 2030, that figure should be about 12%. The final goal, meanwhile, is to have “zero coal in steel production” by 2070.
By Sohrab Darabshaw
- Rising Rates, Geopolitical Tensions, And Debt Maturities Create Risky Mix
- China And Russia Vie For Influence As Middle East Crisis Escalates
- Energy Remains Top Priority In China's $1 Trillion Belt And Road Initiative