India has decided to abandon its plan to establish a consortium of state-run companies for the joint negotiation of coking coal imports, a crucial raw material for steel production. This decision comes amid disagreements among steel mills regarding the specific grades of coking coal they require.
As the world’s second-largest crude steel producer, India imports approximately 85% of its annual coking coal consumption, which totals around 70 million metric tons. One source noted that while the goal was to unify steel companies for stronger bargaining power, the varying requirements of these mills made a common purchasing system impractical.
The initial proposal for a consortium aimed to help steel mills manage global supply disruptions and the volatile pricing of coking coal, especially following erratic weather conditions that affected supplies from Australia—responsible for over half of India’s imports.
In addition to Australia, India sources coking coal from the U.S., Russia, and Canada. However, some steelmakers expressed concerns that participating in a consortium could eliminate discounts they currently receive under long-term contracts.
The federal Ministry of Steel has encouraged mills to increase their purchases of coking coal through spot markets to enhance liquidity, as spot transactions currently represent only 20% of total trades. Additionally, the ministry has suggested that Indian mills diversify their import sources to reduce reliance on Australia and has proposed exploring trade routes to import coking coal from landlocked Mongolia.