BY CLYDE RUSSELL
LAUNCESTON, Australia- Asia’s seaborne imports of metallurgical coal dropped to the lowest in three years in February amid a slump in demand from top buyers China and India.
However, the factors behind the loss of appetite for the type of coal used mainly to make steel appear temporary, and it’s likely that imports will start to recover from April onwards.
Asia’s seaborne imports of the fuel, which is also known as coking coal, dropped to 15.85 million metric tons in February, down from 20.42 million in January, and the lowest since February 2022, according to data compiled by commodity analysts Kpler.
India, the top buyer, saw imports drop to 4.56 million tons in February, down from 6.26 million in January, and the weakest since December 2021.
India’s steel production has been modestly higher in the fiscal year that started in April 2024, with 124.8 million tons reported for the 10 months to the end of January, up about 4.5 percent over the same period in the previous fiscal year.
However, output appears to have been soft in recent months as the industry grapples with two issues, namely higher imports and a government restriction on importing coke, one of the raw materials used to convert iron ore into steel.
In December, India, the world’s second-biggest producer of crude steel, imposed quantitative curbs with country-specific quotas on imports of low-ash met coke, restricting total overseas purchases to 1.4 million tons from January until the end of June.
The government aimed to encourage domestic steelmakers to use domestically-produced coke, but some companies have said the local product doesn’t meet quality standards, with at least one producer saying it would be forced to curtail output from April onwards.
The second issue is that India’s steel imports hit a record high in the first 10 months of the fiscal year, reaching 8.3 million tons, up 20.3 percent from the same period a year earlier.
The high level of imports has prompted the government to propose introducing what it called a safeguard duty, or temporary tax, of 15 percent to 25 percent on steel imports.
The biggest supplier of steel to India was South Korea, with 2.4 million tons in the April to January period, followed closely by China with 2.3 million and then Japan at 1.8 million.
Details of the tariffs are expected to be published within a week and Mint newspaper reported on Monday that 15 percent is likely to be recommended and will only apply to steel products below certain predetermined prices.
