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A panel set up by the steel ministry has recommended that coking coal buyers share their import price to prevent mispricing due to faulty indices.
The panel wants private and public sector domestic steel companies to work together and develop a domestic index for coal pricing which will mitigate volatility in imported coking coal prices by bringing transparency and coordination among buyers, they said. According to the panel, this would also insulate domestic companies from price manipulation by overseas players.
“The import and export prices of coking coal need to be compared. The popular indices used for determining the price of coking coal rely on spot purchases, which command only 5% of the total market.”
“These prices are then extrapolated to purchases made under long-term deals that command a much larger share. This may lead to widespread price manipulation,” the official said.
Australia, the United States and Singapore are the largest suppliers of coking coal to India in this financial year. Demand for the commodity has tapered from the highs recorded in the previous fiscal. The value of imported coking coal fell 13.17% year-on-year in April-May.
India imported coking coal worth ₹21,913.31 crore in the first two months of this fiscal, down from ₹25,237.93 crore a year ago. The total amount went down even as total coking coal imports increased 4.85% to 10.46 million tonnes (MT) in April-May, up from 9.97 MT a year ago.
Officials said the idea is first to ensure a larger data set to determine the real price at which coking coal is available to Indian companies.
Under the suggested coordination plan, the official said that each steel company would buy coal independently but share the price information through a task force operationalised for this purpose by the ministry.
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