India's coking coal imports increased by 7% in October 2023, as strong domestic demand prompted steelmakers to import more of the steel making component.
However, due to rising Australian coking coal prices, end consumers are now preferring Russian imports. According to market research firm SteelMint, the cost-effectiveness of Russian coal has become a significant element affecting consumer preference.
Australia is one of the largest suppliers of coking coal to India, along with Russia, the United States, and Canada. However, the recent increase in the price of the steel-making material has increased the steelmakers' manufacturing expenses. The price of Australian prime hard coking coal increased by 17 percent in October to $364.7 per tonne, up from $310.9 per tonne in September.
In 2022, Australia supplied 70% of India's 57 million tonne (MT) metallurgical coal imports. According to the Institute for Energy Economics and Financial Analysis (IEEFA), this has reduced to 50% as of 2023.
Shipments from Russia increased modestly month over month in October, rising to 0.49 million tonne from 0.48 million tonne in September.
The crucial steelmaking ingredient's supply was affected earlier this year when several of the largest mineral mines in north-west Queensland ceased production for weeks, if not months, after massive floods flooded sites and damaged infrastructure. This generated a shortage because Australia imports more than half of India's coking coal. The scarcity worsened due to high demand for the chemical, which coincided with an increase in infrastructure projects.
According to media reports last month, Indian industries are considering boosting the prices of certain grades of steel to cushion their margins in order to battle higher input costs. While some businesses are exploring for raw materials in countries other than Australia, others are trying to establish domestic mines to assure a steady supply.
JSW Steel joint managing director and chief executive officer Jayant Acharya told Moneycontrol last month that the steelmaker is trying to get the main raw material from a variety of overseas sources, while also considering the development of indigenous mines.
The chairman of the Steel Authority of India indicated last week that the business aims to increase its acquisition of coking coal from Russia due to lower prices.