Decline in coking coal price tries out as a boon to domestic steel producers

Author: Paul Ploumis25 Aug 2014 Last updated at 03:26:00 GMT 

NEW DELHI (Scrap Monster): Local producers, producing steel through blast furnaces, is to be benefited from the decline of coking coal price. This has also been observed in the latest ratings posted by their companies in the first quarter of 2014-2015.

Comparing with previous quarters, the coking coal prices have been declined to 16 percent and a total of 13 percent of the decline in coking coal prices over the whole financial year 2014.

Jayanta Roy, the ICRA Senior Vice President and Co- Head, said that, the exchange rate of financial year 2015 is still intact and the price decline had proven to be a boon to the blast furnace operators in the country, to benefit from the import of international coking coal for the production of their steel.

Even after lifting bans from Karnataka and Goa based mines, the production of iron ore in India still suffers. The decrease in domestic production of iron ore had fueled the temporary halt of iron ore mines in Odisha.

Some of the mines under the influence of the ban, has been allowed to begin production, and is expected to make a production of about, 15 to 20 million tons of iron ore within the financial year 2015.

ICRA awaits that domestic iron ore supply will remain low towards the supply at least for a short period of time, which will in turn affect the capacity utilization.

The price of domestic iron ore remains at sublime level, due to the sharp decline of international prices caused by the decline of demand from China, and the capacity enlargement of large global mines.

The increase in railway good carrying cost and the hike in royalty rates on minerals will also cause a large impact on the cost organization of steel producers.

ICRA anticipates that, the domestic steel demand will gradually recover and will contribute greatly to the Indian economy by the year 2015.