Steel makers are planning to change their raw material procurement strategy, especially for coal and coke, after China decided to increase export duty on all coal-derived fuels.
Steel majors including Ispat and JSW are planning to shift their attention to coal-rich countries in Africa, Australia and Indonesia. “We import almost 85 per cent of our coal requirement from China. The Chinese coal and coke prices have risen almost 150 per cent over last one year. We have already started looking at other coal rich nations,” said a senior Ispat official.
The company imports over a million tonnes of coal from China. It has already started importing coal from Egypt and Bosnia, and is searching for other coal assets.
Indian steel companies collectively import over 4 million tonnes of coal and coke from China.
A JSW steel official said that though they import coal from China, the company is not dependent on it. “We import mainly from Australia and have long-term contract with NMDC. We are also having a coal block in Mozambique,” he said. JSW consumes over 5.7 million tonnes of coal per annum.
According to analysts, the Chinese move may not have much impact on Indian steel industry as major steel firms are shifting their sourcing locations. “However, the decision would add to the continuing raw material scarcity as coal and related fuel will cost more,” said Hedley Albuquerque, research analyst, Lalkar Securities.
On Monday, China increased export tariff on coal-derived fuel to 40 per cent from the current 25 per cent due to an acute domestic shortage. The world’s largest coke exporter, it accounts for 60 per cent of the fuel’s trade volume.
Other Indian steel majors including Tata Steel and Essar have no coal import from China. Essar uses electric furnaces while Tatas souce coal and coke from Africa and Australia.