India’s domestic met coke prices have stablised over the past two weeks with not many deals being concluded amid bids-offer mismatch.
While offers for 64% CSR (BF grade) met coke are currently assessed at INR 45,000-46,000/t (ex-Jajpur), in the western belt offers are comparatively lower at INR 41,000-42,000/t ex-Gandhidham.
In the western region, there is hardly any demand for coke as the key steel mills are either starting up their own coke ovens or opting for self-conversion rather than buying from the merchant market. This forced sellers to keep their offers low.
In the east, coke buyers eager to make bookings have taken a backseat as imported coking coal prices have stabilised in last 10 days making them bid for lower rates.
“Although there is merchant demand in the eastern market, buyers are negotiating and asking for lower offers. But as we already have our hands full and are operating at optimum capacity, we are unlikely to lower offers,” said a coke producer based in the eastern region.
Why have coking coal prices turned stable?
After escalating from the second week of August, Australian coking coal prices have stablised this week at $290/t CFR India amid sluggish global steel demand.
A combination of an unprecedented inflation due to disruption in energy and food supply chains following the Russia-Ukraine war and policy rate hikes by central banks have stifled economic activities in the US, European Union, Japan and South Korea, which cumulatively account for 20% of global steel demand.
Even in the case of China which accounts for nearly half of global steel demand, demand is waning as the country’s economy grapples with the combined impact of a bearish property market, stringent pandemic-induced lockdowns, and a severe heatwave.
In India, with the monsoon nearing its end, a pickup in demand is anticipated only in the case of construction, whereas the flat steel-consuming sectors like automobiles and white goods are still witnessing subdued demand amid inflationary pressure, which is impacting coking coal requirement from the steel sector.
Chinese met coke offers stable
Imported met coke offers from China have remained largely stable in the past three weeks at $443/t CNF India (64% CSR BF grade 25-90mm). While a few Indian steel mills have directly bought met coke from China in the past month, a few have stocked up enough for the next one-two months, while a few others are avoiding its use because of lower CSR and high ash content. Indian domestic coke has ash content of 12.5% whereas Chinese coke has ash content of around 14%.
Outlook
If Australian coking coal prices stablise, India’s domestic met coke prices are liekly to remain firm at current levels. Only if Chinese coke prices decline significantly in the coming days, it might pose a threat to India’s domestic coke prices, despite quality issues. On the demand side, till the export duty on steel is in place, any marked improvement looks far-fetched at the moment, CoalMint notes.
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