Tata Steel’s new coke plant unlikely to spur Indian met coal demand in 2024

Tata Steel’s new Kalinganagar coke plant, in the eastern Indian state of Odisha, is not expected to stoke immediate spot demand for metallurgical coal given the lackluster steel market, according to industry participants.

The new coke facility is set to start operations in the fourth quarter of 2024, sources said Sept. 23.

The plant has a production capacity of about 1.5 million metric tons per year, bringing its coking coal requirement to about 2.1 MMt/y, a company source familiar with the development said.

“We already had planned this under term [contracts] with more allocations in H2, so no spot [demand for met coal] for us,” the source said, adding the plant may start operations in November or December.

Tata Steel did not respond to a request for comment when reached out by S&P Global Commodity Insights.

Even when the coke plant starts operations later in Q4, it is unlikely to reach full capacity due to the subdued steel market, an international trader said.

The plant may run at around 70% of its designed capacity and if it keeps 30% of its blend as prime coal, then the plant would just need half a Panamax cargo of prime coal per month, the trader said, adding that “it is hardly a significant driver for spot demand for Australian prime [met coal] in 2024.”

Platts, part of Commodity Insights, assessed Premium Low Vol Hard Coking Coal lower by $2.65/mt on the day at $185/mt FOB Australia Sept. 23.

Broader expansion

The new facility is part of a broader expansion that involves commissioning of India’s largest blast furnace. It will boost Tata Steel’s crude steel capacity at Kalinganagar by 5 MMt/y, the company said.

The complex also includes key facilities such as a pellet plant and a cold rolling mill, besides the coke plant.

The pellet plant has a 6.4 MMt/y capacity and has significantly reduced Tata Steel’s dependence on external purchase of pellets, the company said.

Tata Steel would utilize captive mines for sourcing raw material for the new pellet plant, a source said.

However, the company has received more quota for purchasing iron ore from both Indian domestic market and seaborne market, with focus on high-grade iron ore products as per a company-wide requirement, the source added.

Blast furnace and cold rolling mill

Billing it as India’s largest blast furnace ever commissioned, Tata Steel said the facility expansion will help meet growing demand of steel from various industries, including automotive, infrastructure and power. The company did not mention if any steel would be exported from the facility.

After the startup in September, the new facility gave a 1.7 MMt production guidance for the fiscal year 2024-25 (April-March), according to the company. Tata Steel said it is planning to ramp up the crude steel production capacity of the facility to full 5 MMt next year.

Meanwhile, the cold rolling mill has been operating since 2023 and is being ramped up with the galvanizing line expected to come online at the end of fiscal 2024-25, according to the company.

The mill will be able to cater to the high tensile grades, and the high-end galvanized steel that the automotive industry requires, Tata Steel said.

The cold rolling mill's initial capacity is seen at around 1 MMt cold-rolled coil per year, which would largely be used in the domestic market, a company source said. India’s domestic market would be able to absorb this new CRC capacity, the source added.

The cold-rolling mill facility includes one 2.2 MMt/y coupled pickling and tandem cold mill, according to the company.