Due to fault in coke oven batteries for the last couple of years, Pakistan Steel (PS), instead of importing expensive metallurgical coke, has been importing reduced quantity of coal to continue with the production of steel.
A well-informed source told Business Recorder here on Thursday that the fault had existed in the batteries for quite some time, but the management was not allowed to incur heavy expenditure in getting it removed in view of Pakistan Steel''s privatisation.
There is a big difference in the price of coal and coke. Coke was three times expensive than coal, the source said, adding that Pakistan Steel imported 0.4 - 0.5 million tonnes of metallurgical coke to keep the production of steel going.
Pakistan Steel had invited offers for the transportation of 1.75 million tonnes of iron ore from Goa, Damiper, Australia, and Bandar Abbas from pre-qualified parties for opening on June 21 for the period commencing August 1 till September 30.
The tender committee of Pakistan Steel, headed by the General Manager, Finance, opened the offers in the presence of nine out of 16 pre-qualified parties on the Board of Pakistan Steel.
Emirates Trading at 18.69 dollars per MT was the lowest for Goa. The same company had quoted 10.47 dollars per tonne for the 2006-07 contract of affreightment (COA) and was awarded the contract. However, the contract did not proceed smoothly due to rising freight markets and Pakistan Steel was forced to announce spot tender and cancelled the earlier tender with the Emirates Trading, which was defaulting on certain occasions and again performing.
Pakistan Steel was convinced that the Emirates Trading will not be able to perform at these rates and as such after negotiations, a raise of 70 percent was allowed resulting in an increase in freight by 7.33 dollars per tonne.
A similar situation was witnessed for Bandar Abbas, where the Emirates Trading was the lowest with freight of 10.66 dollars per tonne and re-negotiated increase of 7.46 dollars per tonne. Their rates for Bandar Abbas are again lowest for the present COA.
The source said that since the international freight market is expected to remain volatile for the next six months, the Emirates Trading will, therefore, be able to perform on the quoted rates or again ask for revision of rates.
Lowest freight rates for Dampier (Australia) were quoted at 39.71 dollars per tonne by Shadab International, which was also the lowest for 2006-07 at 28.10 dollars per tonne and due to volatile market conditions, it had negotiated rates upwards by 40 percent, an increase of 11.24 dollars per tonne.
Pakistan Steel has further announced a tender for transportation of 350,000 tonnes of coal from Australian and Canadian ports for opening on July 20.
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