Indian domestic metallurgical (met) coke prices have held mostly steady over the past week, amidst supply tightness and higher coking coal prices despite a flat supply-demand trend.
Prices for the 25-90 mm blast furnace (BF) grade material are currently ranging between INR 48,000/tonne (t) to INR 49,000/t along the country’s western and eastern coasts respectively.
Till this week, however, domestic met coke prices had undergone a sharp hike of 42.4% (INR 14,000/t) m-o-m till the fourth week of Sept’21, as a result of increasing coking coal prices and a robust export market.
Volatility in Australian coking coal prices
Indian met coke manufacturers primarily consume Australia-originated imported coking coal for producing the BF grade 25-90 mm coke. Although prices thereof have declined by 1.5% this week, it does not suffice to comment that domestic met coke prices might be lowered following the moderate downfall in coking coal prices. This is because raw material procurements for the met coke presently being offered were done much earlier, at a time when coking coal prices were at an all-time high.
Latest prices for the premium low-volatile (PLV) grade of Australian hard coking coal (HCC) were hovering around $318-$375/t CNF India during Aug’21-Sep’21, except during last week when there was a slight downward trend.
Stable steel demand and subdued performance
The Indian steel industry’s performance slumped in Aug’21 when compared to the previous month with a fall in active trading across domestic and overseas market. Crude steel production fell 2.3% to 9.67 million tonnes (mnt) in Aug’21 from 9.84 mnt in July.
Demand improved in September but not to the extent expected because of the delayed monsoon, low overseas and domestic demand.
Nevertheless, Indian steelmaking and thus the importation of both coking coal and met coke are expected to rebound, rising slowly in the final quarter of 2021 and more rapidly from early 2022, as per Australia’s Department of Industry, Innovation and Science.
Consistent export deals
Indian met coke traders and producers have been consistently active in exports, owing to the higher margins in comparison to domestic sales. Seaborne shipments from India have already surpassed 0.7 mn t in the present month as on 27 Sept’21, as assessed by CoalMint.
A total quantity of 0.126 mnt has been exported so far this month, lower by 36.8% m-o-m in comparison to 0.199mn t as of Aug’21.Vietnam, Australia, Malaysia and Italy have been actively procuring met coke from India.
So far in Sept’21, India exported 58,000 t of met coke to Vietnam, 27,500 t to Australia, 21,590 t to Malaysia and 19,000 t to Italy.
These shipments were by leading eastern India merchant coke producers. It is expected that the following trend would continue for the remaining year.
Outlook
The present stability in domestic met coke prices can be assumed to be a temporary phenomenon. Global dynamics suggest that India’s imported coking coal prices would have a moderate increase or sharp rise but would not exhibit a downward graph. With increasing coking coal prices, small-to-mid scale met coke manufactures might curtail their production thereby increasing met coke demand because of supply shortage.
Simultaneously, Indian steel mills are well-prepared to raise prices since, with the approaching festive season, there will be an increase in end-user demand, leading to increase in steel demand, which will eventually lift domestic met coke prices.
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