A. The flooding of coking coal mines in Australia has been a regular phenomenon for the last few years and the coking coal mines have periodically invoked force majeure in their contractual obligation. It has been the experience that this annual event has temporarily impacted the spot coking coal prices. The current price effective upto March 31, 2013 of 160 USD per tonne FOB may move up to a band of 170 – 175 USD per tonne FOB in the next quarter. However, for a longer time perspective the coking coal price need not move up as steel demand is likely to be subdued in the later half of 2013.
Q.2 What impact of stiffening coke prices will have on the Indian steel industry?
A. Cost of production of Indian steel due to price rigidity in coke price would be marginally impacted which can be neutralized by stiffening of iron ore prices.
Q.3 How will steel consumption in India likely to get affected?
A. As the impact of increase in coking coal price may not last for a longer period, the impact on Indian steel prices would be minimal.
The rate of growth of Indian steel consumption has come down from 6 to 7% growth rate in the initial months of the current fiscal to around 4% in the recent period. The restricted supply of imported coking coal due to flood in Australian mines would have a marginal impact on the landed cost of import and may not affect steel consumption in India.
Q.5 How do the Indian steel scenes look like from the vantage point of India’s steel developer?
A. Indian steel scenario looks promising as construction sector is growing and demand for long products from the real estate and industrial construction is stable. The retail and rural sector also provide opportunities for growth in steel consumption. However, there are stiff challenges before Indian steel producers to exploit these opportunities to the full extent.
The growth of Indian steel industry depends a lot on the policy support by the Govt particularly in fiscal areas and trade matters. The Govt needs to enhance investment in infrastructure by suitable changes in the policy prescription to infuses private corporate investment in infrastructure sector. This along with growth in manufacturing would create a facilitating environment for Indian steel industry.
For More Information visit : http://www.steel-insdag.org