According to three government sources and an industry executive, India would increase its coking coal imports, a crucial component in steel production, from Russia as shipments from Australia, its primary supplier, decline and steel mills struggle with increasing costs.
India, the world’s second-largest producer of crude steel, has had difficulties obtaining a consistent coal supply from Australia. Typically, Australia provides over half of India’s yearly imports, which total over 70 million tons. Due to issues like slower rail service, less supply from Queensland than normal, and maintenance outages, the price of Australian coking coal increased by 50% to more than $350 a metric ton last month.
According to two Indian government officials who spoke to Reuters earlier this month, Australia guaranteed India a consistent supply of the mineral. Nonetheless, the sources said that India is eager to expand its import portfolio and explore outside Australia. India’s steel mills attempted to increase the Russian supply of coking coal last year.
However, the crisis in Ukraine caused Moscow to face harsh economic sanctions, which had an impact on the Russian coking coal supply to Indian mills. However, the government and industry sources said that India’s steel mills are expected to increase coking coal supply as Russian suppliers and Indian purchasers streamline payment procedures.
Russian coking coal cargoes are already cheaper than Australian supplies, and some Russian suppliers are willing to lower their prices, they said. “Discounts and rupee payments have helped (Indian) companies to look at Russia as an alternative source,” said one of the government sources who is familiar with the matter.
According to the sources, the government-backed Indian steel producers Steel Authority of India and Rashtriya Ispat Nigam Ltd have chosen to pay in rupees for Russian coking coal.
“The (rupee) currency is an enabling factor for these companies,” said another government source. SAIL, RINL, and the federal steel ministry did not respond to e-mails seeking comment.
According to its chairman, SAIL anticipates four shipments of 75,000 tons of Russian coking coal each during the quarter that ends in December.
Top Russian lenders Sberbank and VTB said in September that they were enhancing their capacity to exchange rupees for roubles, enabling exporters to access money that was essentially locked up in India. The rupee’s convertible value is limited.
