Met coke offers in India has remained stable over the past three weeks at around INR 42,000-42,400/t ex-Jajpur for BF grade (25-90mm) coke. This is despite the fall in imported met coke offers from China that have moved down by $40/t m-o-m at $400-410/t CFR India.
Factors supporting Indian prices
China is still struggling with subdued domestic demand forcing met coke producers to cut down production up to 50% to reduce losses. In fact, domestic met coke prices there have seen two rounds of cuts of RMB 200-220/t ($27-30/t) this week and export offers have also been slashed, thus giving an advantage to Indian steel mills.
However, Indian met coke producers are holding offers firm as they are busy fulfilling their previous orders till November end and also because of elevated coking coal prices.
“There is not much demand at present in the merchant market as Indian mills are sufficiently stocked up. However, eastern Indian producers are also not offering substantial volumes in the market because of their previous order commitments that of NINL and a few other companies”, informed a steel mill based in the east.
Coking coal prices have been assessed at $339/t CFR India and the conversion cost to met coke is around INR 42,000/t (excluding charges).
Australian coking coal supplies are being hampered due to heavy rains and floods coupled with mining giant BHP workers going on strike, stalling production activities. This is keeping prices elevated despite sluggish global steel demand.
Indian steel demand scenario
Post festive season, domestic steel demand remains steady with no significant improvement. While the primary steel mills continue to operate at 80-85% utilisation levels, the secondary mills are facing increased inflationary pressure due to high energy costs impacting their production levels.
Domestic pig iron prices have come down by INR 3,200/t in last one month and are currently assessed at INR 41,500/t (steel grade, ex-Durgapur). On the other hand, HRC prices have come down by INR 1,000/t m-o-m to INR 56,100/t exy-Mumbai.
What lies ahead?
CoalMint believes that, in near-term, domestic met coke prices are expected to remain stable and correction is only possible in case coking coal prices drop. With Chinese met coke producers planning strict production cuts in the coming weeks, their supplies will be affected and offers in the export market may also remain rangebound.
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