Offers for domestic metallurgical (met) coke in the Indian market have risen by INR 3,000-5,000/t with market participants returning this week post-New Year holidays. This rise has come amid coking coal shortage in the international market.
However, buyers are reluctant to accept these raised offers and are bidding for the same at pre-holiday price levels. Subsequently, amid this bid-offer mismatch no major deal has been finalised so far this week.
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Due to reduced supplies in coking coal from Australia, merchant met coke producers are not eager to lower their offers and are holding their stocks in anticipation that buyers would have to ultimately accept the raised offers in the coming days.
“There are inquires in the market from merchant pig iron manufacturers as none of the plants is unoperational or under maintenance. However, the buyers are bidding as per their cost structure and bottomline and are not considering as on date market prices of met coke. Thus, the bids are lower than the offers,” said a merchant coke producer based in Kolkata.
Australian premium coking coal rises by $17/t
Seaborne coking coal prices increased by $17/t in the last 10 days. The tightness in spot availability of coking coal from Australia due to bad weather and healthy demand in ex-China markets is continuing to support the higher prices.
Ex-tropical cyclone, ‘Seth’ continues to impact off the coast Queensland, a key mining region, and is generating unstable weather conditions that are likely to continue for the next few days, hampering port operations and mining.
“Coking coal prices from Australia are likely to touch $400/t in the next two weeks as there are no offers from the miners at present. The only offers we are getting are after mid-February,” a coking coal importer based in India said.
Indian steel demand tepid amid Omicron scare
While majority of Indian steel manufacturers have rolled over their steel prices for Jan’22 after a reduction of INR 2,500-3,000/t last month, overall steel demand continued to remain subdued post-New Year holidays amid the rising Omicron scare.
“Steel manufacturers were quite hopeful of revival in demand in January as the ban on constructions activities in the north has been revoked and rains in southern India have also subsided. However, with surging Omicron cases in the country and restrictions being back in various states, buyers from the end-user segment have adopted a wait-and-watch approach before making any major bookings, thus impacting demand,” said a steel trader based in Delhi.
Outlook
Near-term met coke prices are expected to remain supported as coking coal prices are likely to rise further. However, if the rise in Omicron cases leads to any lockdown or strict restrictions in the country, demand for steel and subsequently its raw material, met coke, would take a hit, negatively impacting its prices.
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