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India set to take centre stage as coking coal importer, steel producer 

Published August 2018 by Deepali Sharma, Steel Raw Materials Editor, Metal Bulletin

 

Deepali Sharma from Metal Bulletin is the Coaltrans guest blogger for the August 2018 edition

An impetus to infrastructure development in India and the government’s plans targeting steel production capacity of 300 million tonnes per year by 2030-2031 has put India on course to replace China as the top coking coal importer in the world and as a major steel producer.


By 2020, India’s imports of the steelmaking raw material are slated to reach 69 million tonnes, according to the Australian government’s resources and energy quarterly report published last month. 


Last year, the country imported around 50 million tonnes of coking coal, lower than China’s imports of nearly 70 million tonnes.


The major push to the country’s steelmaking raw materials demand stems from the growth of its steel market.


According to Tata Steel, India registered a 7.8% rise in apparent steel use in the 2018 financial year that ended on March 31 this year.


Utilization rates in the domestic market are expected to improve further following consolidation of the industry as part of the insolvency and bankruptcy code.  
Concerns, however, persist about the pace at which India’s steel capacity and its infrastructure can grow in the coming years.


Per capita steel consumption in India remains a third of the global average, which augurs well for its potential growth, but also underlines the hurdles the country has faced in starting new projects.


In a report titled The Paradox of India’s Infrastructure, the world’s top coking coal producer BHP said that it was cautiously optimistic” about the country’s economic potential.


“Slow and costly logistics from port to mill act as a constraint [and are stopping] some of India’s blast furnace [operators] from accessing the best-quality raw materials at an internationally competitive delivered price,” BHP’s vice-president, market analysis and economics, Huw McKay said in the report published last month.


Availability of coking coal, for which domestic mills are heavily reliant on imports, remains a challenge for the expansion of India’s steel sector given the greater volatility seen in international prices, according to Metal Bulletin Research .


The volatility in the international coking coal prices have been captured in the movement of Metal Bulletin’s seaborne index as well. 


Between November 2013 - when Metal Bulletin’s fob Australia Premium Hard Coking Coal Index was launched - and August 2016, the month-on-month change in the index’s average was mostly around 10% and below, with the exception of that for the final month, which was as high as 20%. View article


In contrast, the monthly average of prices for premium hard coking coal from September 2016 to April 2018 moved by as much as 66% from one month to another.


While India is expected to remain constrained in terms of domestic availability of high-quality coking coal, government projects including the ‘Bharatmala’ project for highways and roads, the ‘Sagarmala’ project for ports and the National Rail Road Plan 2030 augur well for the country’s rising stature as a steel producer and in turn as a coking coal consumer.

 

 

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