NEW DELHI: Coking coal import in India is slated to rise in the ongoing fiscal on the back of higher demand, Icra said today. “Although India’s coking coal imports remained largely flat in FY2016, the same is slated to rise in the current year on the back of higher demand,” Icra said.
The rise in country’s coking coal would be as a result of commissioning of additional capacities of 3.7 MT (million tonnes) and 3 MT in JSW Steel Ltd and Tata Steel Ltd respectively for first quarter of financial year, 2017 and the substitution of steel imports by increased production, following various protection measures imposed by the government, the report said.
While domestic steel prices have also witnessed an improvement owing to protection measures introduced since February 2016, the recent rally in coking coal prices is likely to almost entirely offset the price gains in the fourth quarter of financial year 2017, assuming no change in prices for hot rolled coil (HRC), iron ore and coking coal from the current levels.
“Icra estimates that gross contribution levels of domestic blast furnace players in Q3 FY17 would remain at similar levels as prevailing in Q2 FY17. However, in Q4 FY17, gross contribution of affected players is likely to dip by around Rs 4,000/MT q-o-q (quarter-on-quarter) unless the increased coking coal costs are accompanied by commensurate price hikes by the steel makers,” it said.
Given the subdued demand in the domestic market, a large price hike in the near term appears doubtful, where the benefits of protection measures are likely to be largely neutralised after the end of third quarter of financial year 2017, says Icra. Any subsequent improvement in profitability from thereon would hinge on an improvement in domestic demand conditions.
