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Hike in coke prices bugs steel makers |
| WRITER |
administrator |
DATE |
2007-10-08 10:14:41 |
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Hike in coke prices bugs steel makers
VIVEK NAIR
Mumbai, Oct. 7: Coking coal and metallurgical coke (metcoke) prices have started rising over the past few months, putting pressure on steel makers in India and China even as they prepare to start negotiations on fresh supply contracts.
The price rise has been triggered by a supply shortage and strong demand emerging from China and India.
Metcoke is derived from coking coal and is primarily used by steel makers who use the blast furnace route.
Coking coal prices were soft for around two years but have started hardening in the past few months.
The price of good quality metallurgical coke rose from $150 per tonne in June 2006 to $260 in August. It is now ruling at $290 per tonne.
The landed cost has jumped to $320 per tonne because of rising freight costs.
The spot price of coking coal is now at $125 per tonne. Last year, annual contracts for coking coal were struck at $100 per tonne.
Industry circles say prices will continue to rise during the rest of the year and further harden next year.
This is the time when global steel mills start negotiating annual contracts with coking coal suppliers for the next year.
Sources here said the negotiations had already started between certain suppliers and Japanese steel mills.
Reports state that the prices that are being negotiated are around 5 to 10 per cent higher than last year’s level.
Industry circles say Indian steel makers such as Ispat Industries, Steel Authority of India Ltd and Tata Steel import coking coal and metcoke. Although companies such as Tata Steel have started buying into overseas mining assets, a large part of the industry’s coking coal or metcoke requirements are still met through imports.
In August, Tata Steel became a strategic investor in Riverdale’s Mozambique Coal Project by acquiring a 35 per cent stake for A$100 million.
The hard coking coal derived from the project will be supplied to Corus facilities in the UK and Europe.
A lack of captive raw material source for coal and iron ore is a major weakness in the operations of Corus.
In 2006, Corus imported about 11 million tonnes of coal to feed its 19-million-tonne production capacity across plants in Europe. The coal, converted into coke for direct injection into blast furnaces, comes from Australia, Canada and the US.
It will also be used to meet Tata Steel’s own increased requirements in India.
The surge in prices is good news for companies such as Gujarat NRE Coke, which is the largest independent producer of metcoke in India.
The company’s total coal resources are estimated at over 580 million tonnes.
Gujarat NRE Coke, which had posted losses in the first quarter of last fiscal, saw a sharp turnaround in its performance. The operating profit for the first quarter ended June 30 rose to Rs 62.68 crore compared with Rs 10.57 crore in the same period of the previous year.
Net profit jumped to nearly Rs 43 crore. The rise in coking coal prices has ignited the company’s stock, which has jumped to over Rs 90 from just under Rs 30 a couple of months ago.
Source: http://www.telegraphindia.com/1071008/asp/business/story_8408562.asp |
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