January 6, 2023 - India‘s steel mills have substituted “costlier” Australian coking coal with alternatives, mostly from Indonesia, Russia and the USA. The three countries have gained the most with supplies increasing by 187 percent, 138 percent and 163 percent, respectively, for the April-November period.

Imports from Australia dropped over 18 percent for the eight-month-period to 23.6 million tonnes (mt), from 28.9 mt in the year-ago-period, data from Ministry and trade sources show.

Imports from Australia dropped over 18% for April-November from 28.9 mt to 23.6 mt

On the other hand, Indonesia supplied 1.84 mt (0.64 mt) in April–November period; Russian supplies increased to 1.67 mt (0.7 mt) and that of the USA stood at 5.50 mt (2.09 mt). Canada’s supplies went up by 26 percent while and Mozambique saw a 36 percent increase in orders.

However, Australia continues to be the largest supplier of coking coal, followed by the USA, Canada, Indonesia, Mozambique and Russia.

Russia and Indonesia both moved up in terms of supplies on a year-on-year basis. Russia is already a major met coke supplier— which includes coking coal, PCI and anthracite.

India, the world’s second-largest producer of crude steel, is also one of the biggest importers of coking coal with nearly 90 percent of the requirements being met through imports. Coking coal is a key raw material in steel making.

Price Rise

Throughout CY2022 , the price of the benchmarked coking coal variant witnessed the second-highest increase — among steel-related raw materials — of almost 50 percent. The annual average price was $390 per tonne against $260 per tonne last year.

“Prices hit a high in March to $620/t, sobered down to $510/t and $540/t in April and May, respectively, but remained above 2021’s average almost throughout the year,” as per Coalmint, the coal arm of Steelmint.

Price of coking coal witnessed an uptrend because of supply disruptions due to heavy rains in Australia. “However, prices skyrocketed as soon as the war erupted and the West imposed sanctions on Russia. As with thermal coal, Europe started sourcing coking coal from Australia,” the report mentioned.

Alternatives Explored

According to a steel industry observer, variance in orders across key markets are seen corresponded to months when prices were on the rise.

For instance, when coking coal prices were heading north in the February – April period of 2022, supplies from Australia dropped by 20 percent in April to 3.2 mt y-o-y (from nearly 4 mt); and fell again in May to 3mt(3.5 mt).

On the other hand, the USA witnessed a 440 percent and 125 percent jump in supplies during April and May. Indonesia, meanwhile, saw orders increase significantly in April, May and June months, data shows.