Tata Steel, JSW Steel, others clock gains as coking coal prices rise sharply

Steel players import around 90 percent of their coking coal requirement.

Shares of steel companies rose sharply in trade on February 21, following the rise in coking coal prices.

Tata Steel stock clocked intraday gains of around 3.7 percent, while JSW Steel was up 3.5 percent. JSPL and SAIL also recorded gains of more than 2 percent, respectively. The Nifty Metal index jumped 2 percent, as well.

Coking coal is a key raw material used in the manufacture of steel through the blast furnace route. In September 2023, industry executive Bimlendra Jha said that steel prices in India are registering an upward trend due to "rapidly" increasing rates ofcoking coal.

Jha added that the steel industry is facing an upward movement in prices because there has been a dramatic shift in coking coal prices, so the industry has no option but to pass on the cost to consumers.

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According to the Indian Steel Association, India is likely to continue remaining “the largest coking coal export destination.” Steel players import around 90 percent of their coking coal requirement from countries, such as Australia and South Africa.

As a result, India is planning to form a consortium of state-owned companies to facilitate coking coal imports to help domestic steel companies tide over shortages, two government sources said earlier in 2024.

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JSW Steel expected higher coking coal costs in the third and fourth quarter of the current fiscal year, but is confident that its impact on margins will be partly offset by price increases that it undertook in August, September, and October 2023, joint managing director and chief executive officer Jayant Acharya told Moneycontrol in an interview on October 23, 2023.

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