Following a spike in raw material costs, some Indian steelmakers plan to exercise the force majeure clause and renegotiate short- and long-term contracts with consumers. “There is a problem of short supply (of coking coal) due to the global geopolitical scenario, and that too at a very high price,” said JSW Steel-owned Bhushan Power & Steel in a letter to its clients. “This is a case of force majeure, with a net impact of $25,250. (per metric tonne). We respectfully recommend that you accept (the price increase) and continue with the current (contract).”
“Coking coal prices have more than tripled…if the scenario continues, we will have to reset long-term contracts and renegotiate short- and medium-term contracts with our clients,” a top JSW Steel executive stated.
Iron ore, which was around $85 per metric tonne in the beginning of 2021, is now at $154 CFR China including freight. Coking coal prices have also risen to $710 FOB Australia in March 2022, from $305 in start of 2021. Ferronickel prices have increased to $43,000 per tonne, from $35,000 a month ago. The rise in the cost of coking coal is due to a supply crunch from Australia – the largest exporter of the commodity – due to thunderstorms and flooding, along with rising tensions in Russia and Ukraine. Russia is one of the biggest suppliers of coking coal after Australia.
