Indian steel companies are facing a 4-5% squeeze in margins in April-June as floods in Australia may limit supplies of coking coal and push up prices of the key raw material, CRISIL Research said.
The effect of rising prices of coking coal will be felt starting April, when steel companies enter into new contracts with miners, the Indian research group said.
The report pegs the price increase for coking coal, which accounts for about 45% of the raw material cost of integrated steel producers in India, at 15-20% sequentially to $260-270/t.
Australia, the world’s largest coal exporter, accounts for about two-thirds of global coking coal trade, with around 90% of that coming from Queensland state.
Rio Tinto’s Hail Creek mine closed ahead of Cyclone Yasi.
Queensland’s coal industry will lose 5% of exports from 2011 due to recent floods.