28-12-2017

India metallurgical coal demand supported by new steel capacity approvals

Indian steel group Tata Steel’s newly approved growth plan increasingly adds weight to the Asian country being the largest driver of global seaborne coking coal demand.

Teck of Canada, US miners such as Contura Energy and Blackhawk Mining and others are increasingly participating in meeting Indian demand for met coal.

Quantities of the raw material supplied to India are expected to rise the most of any other region over the next five years.

Indian demand for seaborne met coal may exceed that of Japan, currently the top trade destination in the world, from 2019, according to analysts at Macquarie.

The investment bank sees India growing next year to take 56 million mt of seaborne met coal, from 47 million mt this year, in a report published in October.

Tata Steel’s 5 million mt/year crude steel capacity expansion at Kalinganagar will be supplied by coking coal imports, according to a Tata Steel executive quoted in a local report Wednesday.

The company would seek to bid for Indian coking coal leases available in the future, he told Outlook.

India’s greater sufficiency in iron ore is aiding steel expansion plans, with several mills, such as JSW Steel, expected to add steel capacity in the coming years.

Tata Steel is ramping up production at the group’s Khondbond iron ore mine in Odisha to help met demand from Kalinganagar, the report said.

Under the Rupees 235 billion ($3.66 billion) Kalinganagar steel expansion plan, construction work is expected to take 48 months, and the amount includes investments in raw material capacity expansion.

PELLETS

Tata Steel in October gave up acquiring Brahmani River Pellets, an Odisha-based 4 million mt/year iron ore pellet plant and assets, after delays and issues meeting conditions needed to finalize the transaction.

A unit of JSW Steel took a 49% stake in the asset in December.

While largely self sufficient, Brazilian iron ore is increasingly flowing to India.

This is partly to meet overall quality requirements, from high iron-rich imported grades, and to allow for the manufacture of higher grade iron ore pellets with lower alumina than possible with domestic ores.

Certain steelmaking applications and steel grades may be optimized by such pellet qualities.

Tata Steel’s Indian and European blast furnaces in Kalinganagar, Jamshedpur, Port Talbot and IJmuiden are supplied by mainly imported coking coal and a mixture of imported iron ore and Indian raw materials.

Teams in IJmuidem, in the Netherlands, along with Singapore and India are managing group raw material procurement and strategy.

A Tata Steel executive, when contacted on the topic, referred to the investment allocated for raw material supply, and the four-year time frame for works to conclude in addressing the expanding needs of Kalinganagar.

Mining companies such as BHP Billiton, along with industry consultants and analysts, have long focused on India’s potential to buy more coking coal from world markets.

Indian coal fields predominantly produce grades for thermal and industrial use, with scarce quantities suitable for coking properties.

This year, Indian steelmakers have pushed to diversify further from Australian coking coal to provide greater sources in supplies to ensure more flexibility around mining and shipment disruptions.

Source: Platts

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