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JSW Steel to negotiate 66% lower coking coal price in FY'10

20 Feb 2009 Evaluate

In an effort to ease out input cost pressure, JSW Steel is negotiating a 66 per cent lower rate for coking coal from global suppliers at $100 per tonne, according to JSW Steel Vice-Chairman and MD Sajjan Jindal. JSW Steel has already negotiated a 43 per cent cheaper rate for coking coal to be procured from global mining major Rio Tinto for the January-March quarter at USD 175 a tonne, against the contracted price of $305 a tonne.

Selling at $96 a tonne last year, coking coal prices had touched $300 (free on board) a tonne under long-term contracts in the international market. Coking coal is a vital raw material in steel-making. After touching their peak during the first-half of 2008, commodity prices including that of coking coal fell by over 60 per cent in the spot market due to the global economic crisis. However, bound under long-term contracts, firms like SAIL and JSW Steel failed to reap the benefits of the price correction.

 

The long-term coking coal contracts for the next fiscal would ease out JSW's input cost pressure, which partially ate into its margins as it reported a net loss of Rs 127.50 crore for the third quarter of 2008-09.

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