Last week's cyclone in Australia has compounded the economic impact of the natural disaster -Indian Coast based Steel & Power Plants May Become Unviable.
The raw material costs of steel plants in India have been escalating for the last couple of months as domestic companies rely on imported coal. For FY 2011-12 the Australian Coal miners will settle for double the price of FY2010-2011.
Steel price rises will pass on to the automobile and construction industries soon enough. Since the floods in Australia the disruption of coking coal supply has driven up the spot prices of coking coal by almost $50 a tonnes to approximately $290 a tonne. The increased spot prices will hit the non integrated steel producers in India in terms of higher contract rates as well.
Prices of thermal coal used by power plants has also gone up thanks to the Australian supply of coal being delayed. Since international negotiations for annual supply contracts will be settled for 2011-12 next month most companies will end up paying much higher rates for thermal coal than last year.
It was $98 per tonne for thermal coal this financial year but may be as high as $130 to 145 a tonne for the coming year. The sky rocketing price rise will affect related industries and inflation may set in thanks to the partial shutdown of coal mines in Australia.
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
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