In September, 2022, India’s met coke production stood at 3.74 million tonnes (mnt), up 5% m-o-m. Coking coal imports also rose marginally by 3% m-o-m to 4.78 mnt.
This rise can be attributed to improved domestic production of steel mills. After the preponement of plant maintenance by the various mills in July-August post-the export duty announcement on steel by the Indian government, the demand for met coke increased in September. The month also marks the end-of the monsoon season during which steel demand remains slow amid reduced construction activities.
In the first six months of 2022 (January-June), the country’s met coke production was on an increasing trend before declining in July due to many steel plants announcing maintenance shutdowns.
India’s crude steel output rises in Jan-Sep’22
The Indian steel sector has been marred by increased raw material costs this year due to the Russia-Ukraine conflict and supply disruptions in key coal exporter Australia. However, this did not have any negative impact on the country’s crude steel output which went up by 7% y-o-y to 93.4 mnt during January-September 2022.
To meet the raw material requirement for the increased crude steel output, India produced 32.5 mnt of met coke during January-September 2022 out of which 92% was captive production and 8% was contributed by merchant cokeries.
India’s coking coal imports during the said period remained stable at 41.77 mnt on a y-o-y basis while its met coke imports rose by 10% y-o-y to 2.08 mnt, mainly from China. India’s met coke exports fell y-o-y by 66% in January-September 2022.
Met coke price trend in India
India’s domestic met coke prices peaked in March (due to the Russia-Ukraine conflict that led to coking coal prices touching all-time high levels) before correcting downwards in June and further in July. The current prices of met coke are ranging at INR 41,000-41,500/t in both eastern and western India.
The increased competition from cheaper Chinese met coke is restricting any significant rise in domestic met coke prices. China’s domestic demand has been sluggish since the past few months due to the property crisis and slowed industrial activities amid Covid restrictions which is why cheaper Chinese coke is being sold in its export market.
Chinese met coke offers to India for BF grade coke at present are $440-450/ t CFR India. This comes cheaper by INR 2,000-3,000/t against domestic met coke prices in India.
What happened in Australian coking coal market?
Australian coking coal prices, that touched all-time high levels of $650/t in March this year, fell by 200% by July-end. However, the same retreated from August and are currently being assessed at $287/t, FoB Haypoint, Australia.
Imported coking coal prices are being supported by demand revival from India after the monsoon season, and limited availability of cargoes due to heavy rains in Australia’s mining hub Queensland.
Outlook
Domestic demand for steel is expected to remain steady till end of 2022 which means that met coke production will also remain in a similar range as of September. But since Indian mills are heard to be sufficiently stocked up in met coke for the next 2-3 months, any sharp rise in production from here seems unlikely.
In terms of prices, despite no-so-positive domestic steel demand sentiments, any significant drop in met coke prices seems unlikely due to the rising coking coal prices triggered by rain-led supply disruptions in key coking coal exporting country Australia.
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