Steelmakers' profits rise amid cheap coal

Spot coking coal prices are down 17 percent this year, and contract prices are expected to fall 7 percent over the next three months.

China's efforts to reduce pollution, coupled with surplus shipping coking coal, will help lower the price of the commodity, according to Hong Kong analysts at UOB Kay Hian Ltd. The largest consumer in the world also plans to reduce its steel production capacity by 210 million tons.

Contract prices for coking coal used for the kilns could fall 7 percent to about $ 112 a tonne in the next quarter, in line with average estimates from industry executives and analysts. Spot prices have fallen 17 percent this year as demand in China has contracted and Australian shipments have increased.

Steel demand in India could rise by at least 4.5 percent in a year as new Prime Minister Modi pledged to build 100 new cities, provide homes for all citizens by 2022, introduce high-speed trains and cheap airports connecting small cities.

Against this backdrop, the walrus profits of Tata Steel's Indian operations could expand to 38 percent in the current fiscal year from 26 percent, while SAIL could double to 10 percent from 5.2 percent, and JSW Steel to 13.65 percent. compared with 11.87 percent.

JSW Steel Chief Financial Officer Seshagiri Rao said in an interview "We expect contract prices for coking coal to fall and business sentiment is optimistic, which means we are selling well and will also be able to raise prices."