Steelmakers to invoke force majeure to call for fresh contracts
Steel

Steelmakers to invoke force majeure to call for fresh contracts

Indian steelmakers are planning to invoke the force majeure clause and renegotiate short-term and long-term contracts with their clients after a surge in uncooked materials prices, with coking coal costs.

JSW Steel-owned Bhushan Power and Steel said that due to the global supply crunch, there is a shortage in supply of coking coal, available at a very high price. The situation is a force majeure with a net impact is Rs 25,250 per metric tonne (mt).

Force majeure is a situation that cannot be anticipated or managed, making the execution of a contract inconceivable or impractical.

Iron ore was priced around $86 per mt in January 2021, which is now $154 cost and freight (CFR) China together with freight. Coking coal price has raised to $700 Freight on Board (FOB) Australia in March 2022, from $300 in January 2021. Ferronickel costs have increased to $43,000 per tonne, from $35,000 a month ago.

According to the experts, the increase in the price of coking coal is due to a supply crunch from Australia, the biggest supplier of coking coal, due to thunderstorms and flooding, along with the Russia-Ukraine war.

Naveen Jindal, Chairman of Jindal Steel and Power Limited (JSPL) told the media that the company would not invoke the force majeure clause. Instead, it requests its massive clients and long-term contract holders agree to the price hike.

Chief advertising and marketing officer of ArcelorMittal Nippon Steel (AM/NS), Ranjan Dhar, said that there had been several price hikes in March, and there will probably be more in the coming days.

World steelmakers, especially Germany and the UK, have elevated costs by at least 25%.

JSW Steel said that steelmakers had warned that costs might rise unsustainably for producers and clients, forcing low manufacturing. Steel companies are trying to hike prices to counteract the hike in coking coal prices. If the situation persists, there might be production cuts.

Image Source

Also read: Top steelmakers ask for federal funding to cut carbon emissions

Indian steelmakers are planning to invoke the force majeure clause and renegotiate short-term and long-term contracts with their clients after a surge in uncooked materials prices, with coking coal costs. JSW Steel-owned Bhushan Power and Steel said that due to the global supply crunch, there is a shortage in supply of coking coal, available at a very high price. The situation is a force majeure with a net impact is Rs 25,250 per metric tonne (mt). Force majeure is a situation that cannot be anticipated or managed, making the execution of a contract inconceivable or impractical. Iron ore was priced around $86 per mt in January 2021, which is now $154 cost and freight (CFR) China together with freight. Coking coal price has raised to $700 Freight on Board (FOB) Australia in March 2022, from $300 in January 2021. Ferronickel costs have increased to $43,000 per tonne, from $35,000 a month ago. According to the experts, the increase in the price of coking coal is due to a supply crunch from Australia, the biggest supplier of coking coal, due to thunderstorms and flooding, along with the Russia-Ukraine war. Naveen Jindal, Chairman of Jindal Steel and Power Limited (JSPL) told the media that the company would not invoke the force majeure clause. Instead, it requests its massive clients and long-term contract holders agree to the price hike. Chief advertising and marketing officer of ArcelorMittal Nippon Steel (AM/NS), Ranjan Dhar, said that there had been several price hikes in March, and there will probably be more in the coming days. World steelmakers, especially Germany and the UK, have elevated costs by at least 25%. JSW Steel said that steelmakers had warned that costs might rise unsustainably for producers and clients, forcing low manufacturing. Steel companies are trying to hike prices to counteract the hike in coking coal prices. If the situation persists, there might be production cuts. Image Source Also read: Top steelmakers ask for federal funding to cut carbon emissions

Next Story
Infrastructure Energy

KEC Secures Rs 10, 380 Mn Substation Order in Saudi Arabia

KEC International Ltd., a global infrastructure EPC major, and an RPG Group company, has secured a new order worth Rs 10,380 million for the Design, Supply and Installation of a 380 kV GIS Substation in Saudi Arabia.Vimal Kejriwal, MD & CEO, KEC International Ltd., commented, “We are delighted with the successive order wins in our T&D business. In a landmark achievement, we have secured our largest ever substation order. This prestigious order in the Middle East has widened our portfolio and strengthened our presence in the region. With this strategic win, our year-to-date or..

Next Story
Infrastructure Urban

Central Bank of India executes first fully digital SCF deal on PSB Xchange

In a major advancement for India’s banking sector, Central Bank of India (CBI) has successfully completed the country’s first fully digital supply chain finance (SCF) transaction on PSB Xchange—a unified multi-lender platform launched by PSB Alliance. PSB Xchange is designed to connect public and private sector banks, NBFCs, and fintechs with corporates and their channel partners to facilitate supply chain finance and small business loans. The transaction marks the first time a fintech-originated corporate lead has been seamlessly processed through the PSB Xchange ecosystem. The lead fl..

Next Story
Infrastructure Energy

Atlanta Electricals secures Rs 1,835 Mn transformer order from BNC Power

Atlanta Electricals Limited (“Atlanta”) has secured an order worth Rs 1,835 million from BNC Power Projects Ltd for the supply of extra high voltage (EHV) transformers and a bus reactor for its Pugal site. The contract includes a mix of 315 MVA, 400 KV and 100 MVA, 132 KV transformers along with a 400 KV bus reactor. The project scope encompasses design, manufacturing, testing, and supply to the project site. Deliveries will be sequenced following engineering and drawing approvals, offering multi-quarter execution visibility and ensuring a steady production run-rate. The order will be ex..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?