India plans to increase purchases of Russian coking coal, which is vital for the steel industry, after a decline in deliveries from Australia, its former major supplier, Reuters has reported.
According to the news agency, citing government and industry sources on Tuesday, Russia offers cheaper prices for the raw material than Australia, from which India normally sources more than half of its annual imports of around 70 million tons.
The report indicated that prices for Australian coking coal spiked 50% to over $350 a metric ton last month, due to factors such as maintenance outages, lower-than-usual supplies from Queensland, and a slower train network.
The sources reportedly said that earlier this month Australia had assured India of steady supplies of the commodity, but New Delhi is nevertheless planning to diversify its imports basket.
Indian steelmakers have been capitalizing on lower Russian coking coal prices and faster deliveries since last year. According to the Indian Ministry of Commerce and Industry, Russia became the country’s third largest supplier of coking coal in the first eight months of 2023, with shipments jumping by 2.3 times year-on-year to 4.3 million tons. Russia’s contribution to India’s overall coking coal imports climbed from 5% to 11.2% during the reporting period.
As Indian buyers and Russian suppliers resolve issues with payment mechanisms, the South Asian country’s steel mills are set to boost coking coal supplies, sources told Reuters. They also claimed that some Russian suppliers are willing to lower their prices even more.
“Discounts and rupee payments have helped (Indian) companies to look at Russia as an alternative source,” one government source was quoted as saying.
SAIL, India’s largest state-owned steel producer, now expects four shipments of Russian coking coal of 75,000 tons each to arrive by December.