The panel wants private and public sector domestic steel companies to work together and develop a domestic index for coal pricing which will mitigate volatility in imported coking coal prices by bringing transparency and coordination among buyers, they said.
This would also insulate domestic companies from price manipulation by overseas players, according to the panel.
“There needs to be a comparison of the import and export prices of coking coal. The popular indices used for determining coking coal price rely on spot purchases, which command only 5% of the total market,” a senior government official told ET on condition of anonymity, adding that this anomaly needs to be fixed.
“These prices are then extrapolated to purchases made under long-term deals that command a much larger share. This may lead to widespread price manipulation,” the official said.
Australia, the United States and Singapore are the largest suppliers of coking coal to India in this financial year. Demand for the commodity has tapered from the highs recorded in the previous fiscal. The value of imported coking coal fell 13.17% year-on-year in April-May.
India imported coking coal worth INR 21,913.31 crore in the first two months of this fiscal, down from INR 25,237.93 crore a year ago.
The total amount went down even as total coking coal imports increased 4.85% to 10.46 million tonnes (MT) in April-May, up from 9.97 MT a year ago.
The idea is first to ensure a larger set of data to determine the real price at which coking coal is available to Indian companies, officials said.
“Sudden distortions in price indices have also triggered instances of panic buying and we must mitigate them,” said a second official.
Under the suggested coordination plan, each steel company would buy coal on its own but would share the price information through a task force operationalised for this purpose by the ministry, the official said.
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