| The crisis has been caused by the decision to cut back coke supplies by Tisco, a domestic coke supplier. Officials from Tisco also confirmed the decision of supplying smaller quantity to SAIL. |
| SAIL had asked for larger volumes of coal from private sector competitor Tata Steel in an effort to ease the tight met-coke situation. |
| SAIL was forced to cut back production at some units at its four integrated plants owing to shortage of coking coal. |
| With Tisco's denial of same, SAIL will now have to source the same quantify from overseas market at higher price or have to cut down production through closure of few more units at its plants. |
| However, Tata Steel has had to cut back supply of coke to the market owing to rising in-house demand. SAIL had been buying around six lakh tonnes of coking coal for the last three years from Tisco. |
| Officials said, "SAIL had bought six lakh tonnes of metallurgical coal every year from Tata Steel for the last three years. For 2004-05, SAIL asked for 10 lakh tonnes. But coke supplied by Tisco has come down to four lakh tonnes this year, down by around two lakh tonnes." |
| Industry sources said Tisco had to cut back sales in the market owing to shortage of the raw material in the overseas market along with high prices in the spot market as well as for long term contracts. Tisco would enhance steel production as well and would require larger volumes of met-coke for its own plant. |
| The price of met-coke sold by Tisco was pegged to the price of similar grade met-coke from Coal India. The price was lower than the landed price of imported coal, as freight charges had peaked recently and were still rising. Met-coke sold by Coal India was priced at Rs 3,000 per tonne excluding transportation costs. |
| Unofficial estimates have pegged the effect of closure of units to be over Rs 500 crore in terms for sales value. The rise in coke costs could also eat into margins. |
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