Coking coal miners hope for steel market in 2015

The plight of global miners deteriorated sharply along with steel mills in 2014, primarily due to the slowdown in economic growth in China, which significantly reduced the growth in steel consumption. In addition, the steel market for other important coal importers such as India and Japan was also not favorable.

On the other hand, strong demand for coal, observed several years ago, prompted miners to make serious investments, which led to a significant increase in production capacity worldwide and to a glut of the coking coal market. The fall in coking coal prices has forced many miners to shut down production, but the largest players continue to mine at full speed.

The oversupply of coking coal is likely to continue in 2015, and much depends on the growth rate of steel production in China and India, which require imported coal. On the other hand, China, along with Russia, flooded the steel market in 2014, while Indian steel exports fell sharply, so the situation is unlikely to change this year either. Coal suppliers need to unload surplus production, which means they will turn their eyes to Japan and rethink their strategy.

The Indian steel industry can rely heavily on domestic growth initiatives alone. The Indian government plans to develop infrastructure, manufacturing and logistics. Much will depend on how the government puts its plans into action, which should be reflected in the fiscal 2015-16 budget, passed in February.