Indian PSU steel makers agree to monthly prices of coking coal - Report

Thursday, 23 Jun 2011

BL reported that one of the largest global metallurgical coal supplier BHP Billiton has pressured Indian public sector steel makers into accepting monthly price revision for at least 50% of the imported figure.

BHP, which supplies around 60% of coking coal required by SAIL and RINL, insisted on a complete changeover to monthly revisions instead of quarterly revisions, but finally relented to a compromise formula thrashed out last week.

Ahead of its benchmark price deal with the Japanese steel mills, at a meeting with SAIL and RINL on June 15 and 16, the Australian prime hard coking coal exporter dictated its latest terms. Coking coal imports for SAIL and RINL is negotiated by 8 member empowered joint committee.

Mr TK Chand director commercial of RINL who is also on the EJC told Business Line that from July to September quarter BHP would supply metallurgical coal under both quarterly and monthly price terms. He told that “The exact price for hard, medium and soft coking coal would, however, be finalized after the Japanese deal is through by the end of this month.”

At the EJC meeting in New Delhi it became apparent that the suppliers wanted to hold the price line in the context of marginal drop in demand from Japan as aftermath of earthquake and tsunami as also from China owing to an economic soft landing going forward.

SAIL imports a total of around 17 million tonnes of coking coal a year, while RINL imports 6 million tonnes a year. All Indian steel majors are import dependent and have very little bargaining power.

The new stance of BHP is significant as private sector steel makers, such as TATA Steel, JSW and Jindal Steel and Power Ltd, also generally follow the terms worked out by the suppliers and public sector importers. (sourced from BL)