The world over commodities continues to surge even though the world's largest economy, the US, might be slipping into recession.
Global steel manufacturers have agreed to a jump of 65 – 71 per cent in iron ore prices.
They are now bracing themselves for a record jump in coking coal prices.
Coking coal prices are expected to rise 205 –215 per cent in 2008 and steel giant Posco has signed procurement agreements with Australian suppliers.
BHP Billiton, Rio Tinto want 200 per cent coking coal price hike to $ 300 per tonne.
Reports suggest Japan's steel producers Nippon Steel and JFE Holdings may accept 200 per cent price hike demand from BHP Billiton.
Meanwhile steelmakers like Nippon Steel, JFE Holdings have cut profit forecast.
Analysts say the hike in coking coal prices may wipe out 10 per cent of pre tax profits.
Indian steel companies are heavily dependent on coke imports and analysts expect earnings to be hit by 15 – 20 per cent as coke forms 30 – 30 per cent of steel inputs.
SAIL imports 80 per cent of coking coal requirement from abroad and JSW Steel, Ispat imports 100 per cent of coking coal requirement.
Steel companies have recently rolled-back steel price hikes. Analysts say with rising input cost any further intervention by the government may call for de-rating in stocks.