MAJOR INDIAN COKING COAL PRODUCERS
BCCL (Bharat Coking Coal limited) , a subsidiary of Coal India Limited (CIL) has coking coal mines in the Jharia coalfield and is India’s biggest producer of coking coal.
- BCCL coal production was 35.86 MT (2015-16) out of which 32.65 MT was coking coal.
- Only St-I grade coking coal (0.037 MT) is used as direct feed in Steel Plants.
- Approx. 29.46 MT of coking coal (washery grade) is being fed to Power Plants which if suitably washed (ash reduction from 34% to 15%) at 20% yield could be used in Steel Plants.
- Upto 3rd Quarter of 2016-17, BCCL’s offtake of raw coal to power sector was 19.98 MT and only 0.70 MT to steel sector out of total offtake 25.36 MT.
Tata Steel owns 5 coking coal mines in Jharia coalfields (3 at Jamadoba and 2 at Sijua ) in Jharkhand.
SAIL and TATA have long term linkages from BCCL but are majorly dependent upon imported Metallurgical coal sourced from Australia, Russia, Canada, USA, etc. If we are able to use the high ash Washery Gr. III & IV coals for the indigenous Steel Industry after due washing then we can gainfully utilize the precious resource for the right industry.
SPOT PRICE ASSESSSMENT OF COKING COAL
Globally, coking coal is traded either through quarterly or annual contracts signed between the steel companies and the miners/traders mutually negotiated based on benchmark spot prices or deals are struck based on daily spot price assessments between steel companies and miners/traders.
Daily Spot Prices of 3 different benchmark grades of Australian Hard Coking Coal are assessed as follows :
- Hard Coking Coal ( Peaks Down) FOB Australia
- PLV Hard Coking Coal, FOB Australia
- HCC 64 Mid Vol, FOB Australia
Assessed values are based on confirmed spot transactions and normalization of values of hard coking coal with similar properties to the 3 grades.
The daily assessed transactable values at which a cargo could be traded are published by agencies like Platts, IHS, GlobalCoal . The requirement of these metallurgical coals by various companies is dependent upon the type of Steel Mills (e.g. Recovery type coke oven would need mid Vol to High Vol coking coal and non-recovery type Steel Mill would prefer Low Vol coking coal), quantity of indigenous coal availability, its own captive mines, blend ratios, BF capacity, Coke Oven market beyond its own needs, etc.
SPOT PRICE ASSESSMENT FOR EXPORT FROM AUSTRALIA TO CHINA & INDIA
- Daily Spot Prices for China and India on CFR basis are published for the 3 benchmark grades of HCC
- For trades being done on CFR basis, the CFR ( China , India) less the daily published freight rates as per capesize, Panamax or Handymax is used to compare to the FOB prices.
- Similarly the FOB prices can be netted forward by adding the freight rates to the FOB spot prices.
- Similarly daily spot prices for US coking coal and weekly spot prices for Chinese coking coal are assessed
Daily Spot Prices for Semi Soft Coking Coal , PCI and Metallugical Coke are assessed in a similar fashion.
COKING COAL : PRICE FLUCTUATIONS IN LAST ONE YEAR

Source : Platts
PRIME HARD COKING COAL
Reasons of Sudden Price Rise in Coking Coal Commodities:
There has been a sudden rise of prices from around $ 85 to $325 within a span of only 6 months starting July, 2016 and hit the crescendo in December, 2016. Following were the major reasons for this price shoot-up:
- The seaborne coal rally which saw hard coking coal prices rise to 325$/ton was spurred by supply issues after Beijing’s decision to limit coal mines' operating days to 276 or fewer a year from 330 before as it seeks to restructure the industry.
- Force Majeure condition occurred in Australian coal mines and fear of cyclone hitting coasts of Queensland and wet weather added to the supply side woes.
- Chinese government stimulus plans which saw steel production pick up only added fuel to the fire, but much of the latest gains and volatility have been blamed on credit-fuelled speculation on futures markets in China, and may not reflect real demand.
COKING COAL IMPORTS
In 2015-16, 201 MT of coal was imported by India out of which 43.5 MT was coking coal.

Source : Infraline
- Australia is the leading exporter of Coking coal
- Australia’s share in Indian coal imports (thermal + coking) stood at 24%
- More than 70% of the coking coal imports are from Australia, followed by Mozambique Canada and US.
COKING COAL PRICE HIKE BY BCCL & CCL: IMPACT ON COKING COAL IMPORTS
CIL’s arm BCCL & CCL have recently raised the coking coal prices by about 20 per cent . The increase in price is done by subsuming washery recovery charge (WRC) which was being charged separately in the case on non-linked washery grade coking coal. The price of steel grade and direct feed coal has been linked to price of washed coking coal, which has been fixed on import parity price. However, the washed coking coal from BCCL & CCL have high ash content to the tune of 17-19% which is much higher as compared to international standards which hovers around 9-10% ash only. Hence, the indigenous washed coking coal cannot be directly linked to the international coking coal indices rather there has to be discounted based on the increase in ash percentages, lower CSN values, etc.
With global coking coal prices cooling down, the hike in coking coal prices by CIL subsidiaries are expected to further boost coking coal imports and is expected to have major negative impact on margins of Steel sector which is yet to recover from the unprecedented global coking coal price rise.
In the current scenario, the final landed price of imported coking coal is comparable to the base price of Steel grade coal from BCCL which makes the latter an unviable option for the steel industry. Keeping the better coking properties of imported coking coal in mind, the price rise by CIL is all the more unreasonable.

As depicted in the table above, there has been a staggering increase in the prices of BCCL coking coal. The prices of Steel Grade I and Steel Grade II coking coal has witnessed an increase of 195.5% and 238% respectively over the period 2011-2017, which is highly unreasonable and adds to the woes of the steel industry plagued by lack of demand.
COKING COAL : RESOURCE DEVELOPMENT
The Jharia coalfield has 5.31 BT of prime coking coal reserves. Most of these resources are either below built-up areas requiring large scale rehabilitation & resettlement or are stuck up below developed workings or in close proximity to coal fire areas. KPMG has conducted a detailed study on developing coking coal resources in BCCL command area. They have suggested potentially three options which may be explored for development of coking coal resources in Jharia Coalfield:
- BCCL can mine the Underground deposits with the help of MDO and sell the coal to end users on cost plus basis.
- The coal blocks in Jharia coalfield maybe delineated and awarded to end user entities/private sector either through e-auction or PPP.
- End users to finance and assist in R&R activities in return of firm supply commitments.
In either of these cases, there will be a gestation period of 4-5 years requiring land acquisition, R&R, seeking various statutory clearances, mine development, infrastructure development, etc. In all the cases, new washeries for individual or group of mines will have to be installed to wash high ash coking coal.
There are few deposits of Semi-hard and Semi-soft coking coal in the command area of CCL and SECL also which could be developed further to augment production and processed to get desired yields of coking coal.
CONCLUSION :
All the economic predictors world-over indicate with confidence that India will attain a stable growth of 8-9% in 2017-18 and may touch a double digit growth rates beyond 2018. Most of this growth shall be realized through the implementation of large infrastructural projects which in turn result into higher steel demand in the country. India would therefore be a large importer of Met Coal and Coke to support higher steel outputs in the country. BHP Billiton Ltd., the world’s biggest exporter of coking coal, sees long-term demand growth for steel-making ingredients supported by rising output in emerging economies led by India. Rising steel production capacity in emerging economies will support coking coal prices over the medium term, with India’s imports forecast to rise 8 percent a year through 2021.
With framing of policies in the right direction, India can save its precious foreign exchange by way of gradually developing its own coking coal resources and reducing Met coal & coke imports. The Indian Steel Industry should be encouraged with a launch of lucrative policies to invite them to allocate the coking coal blocks for development & production of better grades of coking coals. To accomplish this, there would be a strong need to plan investor-friendly rehabilitation & resettlement policies coupled with maintenance of stable law & order situation in such coal bearing States like Jharkhand & West Bengal. In the recent coal block auction declaration for Steel Sector, some of the blocks are under heavily built-up areas, structurally disturbed & may yield lower mineable reserves. Alternatively, BCCL may infuse necessary capital to augment mining capacities of select grades of coking coal in some potential projects. Also, Sale of Steel Gr I & II coals could be planned at desired selling price to attain 14% IRR at 85% capacity utilization of BCCL mines on long term off-take contract basis so that such mines do not incur losses. Washery Grade III & IV coals should be made available to Steel Industry on linkage basis instead of supplying the same to power industry. These coals can be washed at idling washeries of Steel Plants and could be blended with imported coal before being coked for use in Blast Furnaces. While auctioning these coals under linkage auction policy, reserve price should be decided in such a way that buyers are attracted toward indigenous coal as these coals are high in ash content (25-35%) and would yield lower fractions (27-32%) of coking coal in the Washeries.
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