The sudden rally in coking coal prices in global markets led to a subsequent rise in India’s domestic met coke prices by INR 10,000-12,000/t in the past two weeks since the Russia-Ukraine war broke out. Current offers for BF grade (64% CSR) material are assessed at INR 62,000-63,000/tonne (t) in both eastern and western zones of India.
However, buyers are showing strong reluctance due to elevated offers and hardly any trade has been heard at these levels. In fact, steel grade pig iron prices have also fallen by INR 3,800/t from their highs of INR 60,500/t on ex-Durgapur basis on 11 Mar’22.
“There is no inquiry for met coke from merchant producers because of the unaffordability factor and integrated ones are focusing on imported coking coal, making domestic trade come to a standstill,” said a coke producer based in Kolkata.
He further added that end-user demand for steel has turned tepid, while a few housing projects are even heard to defer construction by three months as the current hike in raw material prices is quite unviable.
Australian coking coal prices touch new highs
Since the inception of the war, Australia-origin coking coal prices have increased by $270/t and are currently assessed at $670/t, FOB Newcastle. Amid tensions between Russia and the EU, the European steel mills are foresaking Russian coal to switch over to the Australian variety even at higher prices.
While buying sentiments have turned a bit tepid since the past two days with correction in prices of crude oil and other energy commodities, supply constraints in Australia caused due to heavy rains would take a couple of weeks to normalise, thus supporting coking coal prices at least till May’22.
No offers for met coke from China
India saw cheaper met coke offers from China during mid-February when demand was relatively low due to Winter Olympics. Interestingly, many Indian buyers were heard to have booked sufficient volumes of Chinese met coke till mid-April. However, since the Ukraine-Russia crisis began, Chinese sellers are focusing on meeting domestic requirement as Russian coking coal imports have taken a halt and they have to fill in the gap there. This has led to no competitive export offers from the country for India.
What lies ahead?
According to CoalMint’s analysis, any major downward correction in domestic met coke prices seems unlikely due to the prospects of coking coal prices staying elevated in the near term. Only if demand from end-users takes a hit, coke producers would have no option, but to revise their prices downward to sell their product.
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