Rising coal prices coupled with ashortage of coking coal and thermal coal are forcing Indian steel mills toconsider a steel price hike for the next quarter. Indian steel giants like JSWSteel and Jindal Steel and Power (JSPL) anticipate a cost-driven price hike.

From customs data thatIndian coking coal imports plunged 26.18% on-month to 3.21 million tonnes inSeptember, while iron ore imports fell 35% to 2.32mt. The fall in coking coalimports amid soaring prices, coupled with the expected increase in steel demandduring India’s festive seasons, indicates a steel price increase in the comingperiod.

“The steelmaking-to-energy giant,which relies mostly on imported thermal and coking coal, sees seaborne pricesas likely to remain elevated for one or two more quarters,” JSW Steel marketingdirector Jayant Acharya told local media.

“Coal is having an impact on costsand that will have a bearing on the price of steel for the next few quarters,”he adds. “Benchmark thermal coal prices have more than doubled since the startof the year to more than $200/tonne, with sharp increases in the last few weeksdue to a global squeeze on supply.”

The majority of integrated steelplants in India are dependent on thermal coal supply for their powerrequirement. Owing to supply issues, prices of thermal coal have increased fourtimes above the normal rate, says JSPL.

“A tonne of coal, which was in therange of INR 4,000-6,000/tonne ($53.40-80.10/t), is now costing INR8,000-12,000/tonne,” JSPL managing director V R Sharma told media.

“Steel in India at present is in therange of INR 50,000-55,000/tonne. The shortage of coal has led to an increasein its prices, which will have an impact on steel that may also go up due tothis unprecedented rise,”