Indian Chemicals to steel firms due to China’s energy crisis

Indian Steel

Indian Steel

The worsening energy situation of China has led to an impact on the global coal prices, and which has led to increased logistic costs, raw material costs across the sectors. On the other side, the order books of the Indian Chemicals and the steel manufacturers are yet to witness the growth due to the reduction in the supply by the Chinese counterparts according to the reports by the industry analysts. 

The energy crisis of China and the resultant is furthermore likely to shut down the Chinese companies or the intermittent curbs due to the manufacturing which would prove beneficial for the Indian Companies, as because the demand of their products is bound to rise both in the domestic and even in the international markets, said India Ratings and Research, which is a Fitch Group Company.

The domestic end-user industries for chemicals such as dyes and pigments, pharmaceuticals, and agrochemicals will pass on the overall increase in costs to consumers, thus maintaining profitability, Ind-Ra said in a statement. The rebound of global economic activity with the lifting of the Covid related restrictions has led to a shortage of the fuels which are used for the power generations in China and in many other countries. 

The Indian industries are furthermore scrambling for coal supplies as Coal India Ltd, the top coal miner of the world has now temporarily stopped the deliveries for all the consumers within the country and other than the power stations. The aluminum plants in India are furthermore grappling with a low level of Coal stocks. “If coal supply is not restored immediately, it would lead to irrevocable collateral damage of these national assets," the Aluminium Association of India said on 15 October. It further went on to say that if there is any power outage or blackout it will further lead to catastrophic impact and that will lead to a complete shut down for which the recovery will take at least 12 months. 

The international shortage of coal is due to irregular rainfall which leads to flooding in the mines in China. Internationally China is the largest producer and consumer of coal.  As the coal prices have soared in the international markets, the producers in China are now looking for alternative energy supplies such as oil and diesel, which is now leading to an increase in the price of oil in the international markets. The fall in China’s output and the imports of intermediate steel products in India would directly benefit the Indian steel plants by lowering the import risks and by increasing the export opportunities.                



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