India's coking coal import from Oz may rise.

Australia is the front runner to cash in on India's growing demand for coking coal, says a research by Reserve Bank of Australia's economic panel.

India is the world's fourth-largest steel producer but relative to the size of its economy the country's steel consumption is low, said the research, which was done by Markus Hyvonen and Sean Langcake.

"As the [Indian] economy develops further, steel consumption is likely to increase. Indian steel makers have plans to expand capacity substantially in order to meet the anticipated increase in demand.

"While India has relatively large reserves of iron ore, its steel makers import most of the coking coal they require. As Australia is a major supplier of coking coal to India, these exports from Australia are likely to expand further," the report said.

Indian steel production has grown strongly in recent decades and is likely to continue to expand as domestic producers increase their capacity to meet the anticipated demand.

Given its relatively large reserves iron ore, India is likely to remain self sufficient for supply of iron ore in the foreseeable future, it added.

"In contrast, Indian steel makers rely heavily on imports for their coking coal needs.

India is the third-largest importer of coking coal and has become the second most important destination for Australian coking coal behind Japan.

Although India's national steel policy has identified the need to further develop non-coking coal methods of production such as electric arc furnaces, its existing capacity means coking coal is likely to continue to play a role in the development of the local steel industry and "drive further demand for Australian coking coal in the future", it said.

Meanwhile, an AAP report quoted Christine Milne, senator and deputy leader for the Australian Greens, who noted that India and China were openly talking about moving away from coal as a source of energy.

Milne said China and India were openly discussing moving away from coal.

She moved a motion calling on the government to require the Bureau of Resources and Energy Economics to review its model "based on the current geopolitics of coal".

Source : smartinvestor.in