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News: As per media sources, the government is seeking to diversify its coking coal procurement sources by identifying Russia and Mongolia as key new markets. Additionally, plans are in progress to establish a domestic mechanism for determining coking coal prices and creating an index.
Views: This represents a positive development for steel companies since coking coal, a crucial feedstock material, accounts for 35-40 percent of steel-making costs. In FY24, nearly 58 million tonnes were imported, a 10-year high. Diversifying coking coal sources can reduce dependency on a single market, potentially lowering costs and enhancing supply security. Additionally, establishing a domestic pricing mechanism and index for coking coal can offer greater price transparency and stability. We have a positive view on JSW Steel, considering it our top pick in the domestic steel space amidst its ambitious growth plans, superior product portfolio, and healthy profitability guidance.
Impact: Positive