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Volatile coking coal market fluctuating cost of steel production.


Date: 01-10-2020
Subject: Volatile coking coal market fluctuating cost of steel production
The price of coking coal required for PCI, the technology used for reducing steel production cost, went up from an average of $61 per tonne in FY16 to $126 in FY19 and came down to $101 in FY20.

A volatile coking coal market has been bringing in fluctuations in the cost of steelmaking with imported coking coal prices hovering between $80 and $200 per tonne free on board (FOB) in the last five years.

AK Singh, chairman of state-run Rashtriya Ispat Nigam (RINL) said the expenditures on account of coking coal at RINL stood at Rs 5,030 crore in FY20, coming down from Rs 5,918 crore the previous year. While in FY19 the expenditure incurred on coking coal increased by Rs 121 crore over the expenses in FY18, in FY20 it was lower by Rs 888 crore.

Average FOB price of imported hard coking coal was $165 per tonne in FY20 down from $192.67 per tonne in FY19. Hard coking coal prices reached its peak in FY18 at $200.36 per tonne, up from $152.66 per tonne in FY17. The highest jump in prices occurred in FY17 after it reached $152.66 per tonne from $86 per tonne in FY 16.

Australian hard coking coal spot prices rose from $150 per tonne to $165 per tonne early this year but the Australian government sees hard coking coal prices settling at $ 126 per tonne this fiscal. This would help Indian imports to some extend.

“India imported 52 mt coking coal in FY20, of which 37 mt was sourced from Australia. But the requirement may reach 192 mt to 161 mt for charging blast furnace and 31 mt for pulverised coal injection (PCI) when steel production reaches 300 mt in 2030. The steel demand in India has been estimated to go up to 255 mt by then,” said Singh.

The price of coking coal required for PCI, the technology used for reducing steel production cost, went up from an average of $61 per tonne in FY16 to $126 in FY19 and came down to $101 in FY20.

Singh said to reduce the cost of steel production blast furnace, coke has to be reduced and the level of PCI has to increase to 180 to 200 kgs for per tonne of hot metal production. “At RINL, use of blast furnace coal at present has been stabilised at 300-350 kgs for per tonne of hot metal production and PCI has been stabilised at 150 kgs for per tonne of hot metal production. But 65% of the steel production comes through the blast furnace route, requiring a reduction in coal for blast furnace to save cost,” he added.

India imports 90% of its coking coal requirement from Australia, Indonesia, Canada, Mozambique and the US. It has been trying to get Russia as a new source but the increased use of soft coking coal (prices of which are lesser- an average $140 per tonne FOB in FY20) to blend it with washed Indian coking coal is required to bring down the cost on account of coking coal in steel production.

At present India has nine washeries washing 28.1 mt of Indian coking coal and 11 more washeries are to come up by December to wash 20.59 mt of coking coal.

Source:-financialexpress.com

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