India: Metallurgical coke prices edge up as coking coal rally continues

Met coke prices in India rose by INR 4,500-5,000/t across the eastern and western regions of the country in line with rising prices of Australian coking coal.

Blast furnace grade (25-90mm, 64% CSR) met coke is currently assessed at INR 58,000/t exy Surat and Cuttack. However, offers are heard at even higher levels of INR 62,000-63,000/t at which trades have not been heard till the time of publication.

“Our conversion cost for met coke produced using March-booked coking coal cargoes is likely to be higher at INR 65,000/t levels. However, we are still offering coke for May at lower rates of INR 62-63,000/t levels, amid buyers’ resistance to high prices”, said an eastern-India based coke producer.

In south India, the demand for coke in the merchant market is not that high and a reputed seller is already heard to have concluded two months’ coke supply contracts (till May) for different customers at an average price of INR 54,500/t exy Bellary.

Rise in Australian coking coal prices

Australian premium hard coking coal prices that had plunged $76/t in the previous week have again risen by $102/t w-o-w to $506/t FOB.

The recent rise can be attributed to fresh sanctions by the European Union on Russian coal imports that forced the steel mills to look for coals from other origins, thereby pushing up prices.

Russian coking coal imports account for about 25% of the EU’s coal imports and now European countries would have to fill the gap with coals from alternate sources.

Domestic pig iron prices climb

*Steel grade pig iron price

Domestic steel grade pig iron prices have gone up by INR 2,000/t this week to INR 58,500/t, while foundry grade has increased by INR 1,500/t to INR 63,400/t exw Durgapur.

Amid tepid domestic steel demand, Indian steel manufacturers are focusing on the export market in the absence on Russian material, providing support to pig iron prices.

In addition, omestic pig iron prices have gained momentum amid improved export realisations. These factors are supporting domestic met coke demand and prices.

Near-term outlook

Domestic met coke prices are likely to remain supported in as any major downward correction in imported coking coal prices seems unlikely and also because the conversion cost of March-arrival coking coal is expected to be quite high, thereby forcing sellers to offer coke at dearer rates.