India is experiencing growing demand from domestic steel industry. Coking coal (MET Coal) business is positively correlated to Steel Business. As global steel industry revives, it is increasingly being able to garner higher realisations.
Hence coking coal price has been seeing a steady climb upwards for last six months. Coking coal benchmark price for quarter April to June has been set at $200 compared to last year’s benchmark at $128 per tonne. Spot prices, too, continue to increase on back of strong demand.
2009-10 saw a decrease in volumes compared to the corresponding period of 2008-09, due to no demand from export market. Though there was no considerable slump in domestic market, the absence of exports made all the difference. The global demand is picking up steadily and we expect to report an improved performance in 2010-11.
Domestic steel consumption in India is at 60MT in 2009-10. By conservative estimates, India will require 200 MTPA of steel by 2020. For the sake of comparison, China is at 600 MTPA level in 2009-10.
At 200 MTPA, India would require met coke of around 120 MTPA and coking coal of around 170 MTPA. This translates to around 158 MT of net import demand of equivalent coking coal in India.
One may look out players, in public and private domains, which are doing right things to address above opportunities and participate in their business, may be thru an equity route.
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