The downward correction in coking coal prices since last week has kept domestic met coke prices largely stable with 25-90mm blast furnace grade (64% CSR) being assessed at INR 60,000/t in ex-Cuttack.
In west, while few offers were heard in the similar range, a reputed met coke producer is heard to have kept its offers as high as INR 65,000/t ex-Kandla basis, the reason being high coal to coke conversion cost.
A reliable source informed that at an average rate of $600/t FOB of coking coal for March, the conversion cost comes more than INR 65,000/t. In such a scenario, selling below the cost has become a huge challenge.
However, in south, producers are heard to be offering met coke of the above-mentioned specification at INR 58,000/t ex-Bellary.
Pig iron producers feel the heat
Market participants have informed CoalMint that merchant pig iron producers are heard to have either suspended their operations or cut down on their plant utilisation levels amid sluggish domestic demand and unaffordability of met coke prices.
“Demand from merchant pig iron producers have turned tepid and there are not much inquires in the merchant market. Hence, despite higher conversion cost, we are selling coke at lower levels”, said a merchant met coke producer based in Kolkata.
Domestic pig iron prices (steel grade) that went all-time high up to INR 62,800/t as on 22 March have come down by INR 2,500/t to INR 60,800/t exw-Durgapur. The price correction is majorly because of unacceptability from end-user segment.
No substantial offers from China
China’s recent Covid wave and subsequent lockdowns have impacted steel demand there. As a result, there has been accumulation of coke stock at ports and no substantial met coke export offers from China are seen due to vessels unavailability and Covid protocols, leading to delays in loading of vessels and shipments.
Australian coking coal prices correct by $136/t
Australian premium hard coking coal prices have corrected by $136/t to $534/t, FOB basis, from its highs of $670/t on 15 March. This correction is mainly because of buyers’ reluctance to such high prices and Covid-induced bearish sentiments in China and few other European countries. In fact, buyers across the globe have adopted a wait-and-watch mode amid expectations of price correction with improvement in supplies as rains are expected to subside in Australia in April.
Outlook
Domestic met coke prices in India are likely to see some downward correction if coking coal prices continue their downward trend. However, with sanctions in place on Russia, the country accounting for 10% of the total international trade in coking coal, global prices are expected to remain elevated at the levels of $350-400/t throughout the year, making met coke conversion cost and its prices higher.
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