No justification for higher Q2 coking coal contract price: SAIL

May 17, 2010: The chairman of Steel Authority of India Ltd (SAIL), S.K. Roongta, on May 17 said there is no reason for further hike in coking coal contract price for second quarter of 2010-11.

"Fundamentally there is no justification for further hike in coking coal prices in second quarter of FY11 as steel prices are already under pressure on higher input cost," Roongta told ICMW on the sidelines of a press conference in Kolkata.

Asked whether the prices should remain unchanged at around Q1 contract level of $200 a ton, the Chairman said, "I do not want to speculate on prices, but the fundamentals are there for everybody to see."

He said steel prices are already down by about $50 to $70 a ton from highs witnessed in March and in middle of April because of turbulence in European market despite rise in input costs like coking coal and iron ore.

"Steel prices have already somewhat reacted in the last few weeks as price is very much a factor of demand and supply. Since supply of steel in the world market has improved during the past few months, there has been increase in offtake. But how much of this offtake was on account of inventory building or increase in consumption is difficult to say," Roongta said.

Roongta further said compared to the steel prices prevailing in 2008, current prices are down almost 40 percent, while cumulative impact of raw material cost (of coking coal and iron ore) is almost same.

SAIL imports around 12 million tons of coal annually, he said.

Source: ICMW