Coal Prices May Slide On Global Fall.

Coal prices may soften in the coming months, bringing respite to steel, cement and power companies. The market expectation is that coking coal price is likely to depreciate by $30-$40 per tonne but there may be a drop of $10 per tonne on thermal coal. A drop in global commodity prices and softening of crude oil coupled with a sluggish demand from Japan are likely to have a cooling effect on coal prices.

Gautam Kumar, director of Asia Minerals India , said, "prices of coking coal is likely to come down by $30-$40 per tonne as the situation has improved post-Australian floods. This will have an impact on the Indian prices as well. User industries like steel will benefit from this drop in price." Australian coking coal futures is hovering around $330 per tonne and the spot price is $320.

India imports around 92 million tonne coal annually. Of this, the country imports 28 million coking coal and the rest 64 million tonne is thermal coking coal . India produces around 4 million tonne coking coal annually. In fact, the Planning Commission has forecast coal shortage in India will soar to 200 million tonne by the end of the 12th Plan (2012-17 ), with a demand of 1,000 million tonne against a production of 800 million tonne. Next year, the shortage is expected to be around 142 million tonne with an availability of 554 million tonne and against a requirement of 696 million tonne.

A trader in coking coal said, "coking coal is the main raw material for steel industry. The abrupt rise in coking coal price has affected the margins of steel companies. The companies cannot pass this hike to user industries any more. So, the demand for coking coal is likely to come down.

According to market dynamics, this will obviously put a pressure on coking coal suppliers to bring down prices. A correction in price is imminent. It has gone up from $225 per tonne to $330 per tonne over a period of six months.

Source : economictimes.indiatimes.com