Coking coal prices are set to go through the roof, pushing up valuation of assets. Coking coal contract from January is settled at $225 a tonne, up from the previous $209 a tonne, and indications are that prices for the second quarter of the financial year will hit $250 a tonne.
According to Gerard McCloskey, chairman and founder of the McCloskey group, which specialises in data and analysis of the coal sector, there would be frenetic corporate activity in the coal space. McCloskey was speaking on the sidelines of the Steel Raw Materials organised by IPF Online and the Bengal Chamber of Commerce & Industry (BCCI).
“There will be immense corporate activity pushing assets to new highs,” McCloskey said. Demand apart, supply constraints were pushing up prices. There has been a spate of coking coal closured in China.
“This year, China’s coking coal imports could be more than 40 million tonnes, up from 34 million tonnes last year,” McCloskey said.
For domestic steel majors, it would mean a significant cost push. Indian coking coal is of poor quality and requirements are mostly met through imports. There are some analysts reports suggesting that coking coal prices could go up to $350 a tonne. McCloskey, however, said that it was a “bold” forecast.
“When coking coal prices soared to $300 a tonne, steel prices were at $1,000 a tonne, and steel prices are nowhere near that level,” he said.
