Impact of Coal Shortage on TMT Price
Recent days and weeks have witnessed recurrent power failure almost across the nation. The experts charge coal crisis for this unprecedented electricity loss in the country. There have been several reasons for scarcity of the non-renewal source of energy. Last year lock down and thus, economy became standstill. Hence, power demand reduced in 2020. In 2021, lock down opened up and electricity demand soared up by 13.2% as compared with previous year. As a result, coal demand also hiked. In India, 70% of electricity is created from coal. Demand has gone up, but supply slid down. International prices from Europe and China has been hiked and hence, India has curtailed in import of coal from these exporters. For example, there has been 30% less import figures as compared to the average of last 7 months in Aug, Sep 2021. Further, it was 42% less as compared to the same of Aug 2020. In addition to this, the recent monsoon has flooded and water logged in the domestic coal mines which resulted in less production. Transportation also got affected in the huge rainy circumstances. Also, a few states couldn’t keep the adequate coal reserve before the commencement of monsoon.
Increasing prices of international coal – both coking as well as thermal - used in the construction of ferrous as well as non-ferrous metals, respectively, have made an impact on margins of metals companies in July-September quarter (Q2) since steel companies has now observed margins getting tough, even as the base firms could stand to benefit, said brokerages.
Coking coal rates, a key raw material take advantage in the making of steel, have went up $25-$30 per tonne serially along with costs of other consumables.
For example, Tata Steel, the first steel producer of the country, its domestic operations have been impacted to a degree by upper coking coal prices.
These all state of affairs has compelled steel companies to hike their goods price. That is why; the price of TMT steel bars is going on upward direction. This ultimately is bearing extra burden on consumer’s pocket regarding their home construction.