The downtrend in Asian seaborne metallurgical (met) coke prices continued this week too. Prices fell over 4% w-o-w across grades owing to two main factors.
- Reduced production costs of met coke, due to fall in Australian (down 8% w-o-w) and US (down 9% m-o-m)-origin coking coal prices
- Sluggish steel demand sentiments in China due to increased output curbs to cap annual steel volumes for CY’21
CoalMint assessed the Japan-origin blast furnace (BF) grade met coke, with 64% coke strength after reaction (CSR), at $650/tonne (t) CNF India, down by $28/t (4.1%) on a w-o-w basis.
Japanese 62% CSR BF grade met coke price is assessed at $618/t CNF India, also down by $28/t (4.3%) w-o-w.
Columbian ultra-low phosphorus (ULP) nut coke import prices are presently hovering around $570-580/t CNF India, amidst stable domestic demand and optimum capacity utilisation by ferro alloy plants in India.
Earlier, however, seaborne met coke prices had surged as much as 87% during Jan-Oct’21 on continued supply tightness resulting from persistently high import demand from China.
Australian coking coal prices fall 9% in Nov
Australian coking coal prices have undergone a downward correction of 9% so far this month amid lack of trading activities. Asian markets, excluding China, presently remain muted without any firm buying interest.
The rapid decline in seaborne coking coal demand is being aggravated by increased domestic coal production and softening of steel and coke demand in China, the world’s top coal consumer.
Australian coking coal prices are currently assessed at around $370/t on FOB basis for the premium low-volatile (PLV) grade of Australian hard coking coal (HCC).
Bearish met coke demand in China
Chinese domestic met coke prices have dropped by 16% w-o-w and coke demand from mills is also reduced after the production cut in the country’s largest steel producing province, Hebei. In fact, a few coke producers in north China’s key steel producing province, Shanxi, have also curtailed production following stringent governmental restrictions, according to market participants.
While China has imposed curbs on steel production throughout CY’21, restrictions are now being rolled out more frequently and limits have been extended into the first quarter in an effort to ensure blue skies for the Winter Olympics. In addition to this, China’s key steel consumer, the housing sector, is under strain from rules aimed at curbing leverage as well as slowdown in the market.
Met coke prices in North China, with 12.5% ash content, are now struggling at RMB 3,110/t ($494.9/t), down by RMB 1,000/t since the start of this month.
Notably, coke and coking coal contracts on the Dalian Commodity Exchange had touched their lowest in about four months on Wednesday, 17 Nov’21, at RMB 2,650/t ($415.2/t) and RMB 1,842.5/t ($288.7/t) respectively.
Outlook
Winter production curbs and stringent control on carbon emissions in China are expected to continue and result in an annual steel output cut of 40-45 million tonnes (mn t) in CY’21. This would lead to reduced met coke demand from the country.
Subsequently, imported met coke spot prices are expected to continue their downward trend in November-December.
Furthermore, there is limited upside potential for Australian coking coal prices, at least till Dec’21, and hence, imported met coke prices are likely to follow suit due to lower production costs.
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