- Met coke sellers remain bullish amid tight supply, improving downstream demand
- China may see 3rd round of coke price hikes amid sustained demand, supply constraints
India’s domestic met coke prices strengthened significantly in the week ended 27 August, supported by tighter availability, improving downstream demand, and sharply higher imported coke and coking coal costs.
BF-grade met coke in eastern India surged by INR 1,200/t w-o-w to INR 37,000/t ex-Jajpur, marking a nearly 2.5-year high, while western India remained stable at around INR 33,800/t ex-Gandhidham. Foundry-grade coke was broadly stable at INR 36,600/t ex-Rajkot. A domestic transaction of 30,000 t was recorded at INR 37,550/t ex-works, further indicating the prevailing firm market sentiment.
Indonesian met coke offers surge
India’s imported metallurgical coke market witnessed a sharp price escalation, with Indonesian BF-grade met coke (65/63 CSR) rising $22/t w-o-w to around $335/t CFR India. The increase was driven by higher FOB offers from Indonesian suppliers, elevated freight costs, and stronger Chinese procurement.
More importantly, a market participant learned that “severe water shortages in Indonesia are disrupting coke-oven operations, with several producers reportedly operating at only 60% of rated capacity due to water rationing. The supply disruption, coupled with tighter regional availability, is providing strong upward momentum to imported coke prices.”
China & Mongolia: Tight raw-material availability adds further pressure
The seaborne coking coal market has strengthened amid significant supply-side constraints in China and Mongolia. Market feedback indicates that Mongolian trucking shortages, production declines of around 30% in key mining provinces and delays in mine recovery following safety incidents are restricting Q4 availability.
Chinese buyers are actively seeking FOB, port, and afloat cargoes, intensifying competition for seaborne material. Meanwhile, disruptions to Russian rail logistics and maintenance-related shipment constraints are further limiting alternative supply. These developments are reinforcing expectations of a tighter coking coal market in the coming quarter.
Coking coal rally: primary cost catalyst
Australian premium hard coking coal (PHCC) rose sharply by $16/t w-o-w to $261/t FOB Australia, supported by stronger Chinese buying and supply disruptions in Shanxi. The sustained increase in international coking coal costs is expected to progressively raise domestic coke production costs as higher-priced replacement cargoes enter Indian plants. Consequently, the current upward pressure on coke prices could persist despite some resistance from buyers.
China coke market: Second hike implemented, third round in focus
China’s coke market remained firm, with the second round of price increases of RMB 100-110/t fully implemented, taking cumulative increases to RMB 150-165/t. Although improved coke prices have provided some relief to producers, most plants remain under margin pressure, with some reducing output. Slightly higher pig iron production and improved steel-mill procurement are supporting coke demand, while tight coking coal availability continues to constrain supply. Market expectations of a third round of coke price hikes remain a key bullish signal.
Pig iron: Higher coke costs lift cost floor
India’s pig iron market also moved higher, with Durgapur steel-grade pig iron increasing by around INR 650/t w-o-w to INR 39,200/t ex-works. The rise reflects the broader increase in ferrous raw-material costs, particularly met coke. Potentially stronger export opportunities under the advance-licence mechanism could provide additional demand support; however, producers’ ability to pass higher input costs through will depend on domestic steel demand and export realisations.
Outlook
Met coke prices are expected to remain firm in the near term, supported by tight supply across Indonesia, China and Mongolia, higher coking coal costs and improving demand. In India, elevated import parity should support domestic prices, although buyer resistance and weak coke margins may limit further gains. A third round of price hikes remains possible if coking coal prices and Chinese buying stay strong.
Leave a Reply