Coal India Ltd., the world’s largest producer, plans to increase the price of the best quality of coking coal it supplies to Steel Authority of India Ltd., the nation’s second biggest maker of the alloy.
Unit Bharat Coking Coal Ltd. plans to charge 80 percent of the landed import price from April, compared with 70 percent at present, Technical Director Ashoke Sarkar said in a phone interview today. The unit supplies 1.5 million metric tons of coal to the state-run steelmaker, he said. The company also plans to change prices every month beginning April, compared with quarterly pricing now.
The increase in domestic rates may counter the benefit of lower international coal prices at the steelmaker. Steel Authority and competitors in India are negotiating coking coal prices as low as $160 a ton for the quarter ending March, a 32 percent decline from year-ago prices, three people familiar with the matter said Jan. 10. High production capacities and slowing demand in Europe have brought down prices of the steelmaking ingredient last year.
“We are proposing the new pricing formula only for washed coking coal, all of which goes to Steel Authority,” Sarkar said.
Steel Authority chairman C.S. Verma didn’t answer two calls made to his mobile phone. The benchmark FIS spot coking coal price was $168.50 a ton as of Jan. 29, declining 24 percent in the past year.
Coal India shares rose as much as 1.5 percent to 352.80 rupees and traded 0.5 percent higher as of 2:33 p.m. in Mumbai trading. Steel Authority rose 0.2 percent at 89.10 rupees.
The steelmaker buys about 3 million metric tons of coking coal from Coal India, or about 25 percent of its need. It imports almost 70 percent of its requirement, mostly from Australia.