Domestic met coke prices in India that were holding up since the last three weeks have dropped by about INR 2,000-2,500/t. The price of blast furnace grade met coke (25-90mm) is currently assessed at INR 40,000-40,500/t in both the eastern and western parts of the country. The three factors responsible for the decline in prices are explained as under:
Chinese coke prices fall further
Chinese met coke prices for the above-mentioned grade, which was on a declining trend in the past month, have inched down further by $15/t to $390-395/t CNF India this week. The decline in prices can be attributed to low downstream buying appetite in China. The country’s steel sector continues to face challenges from weaker-than-expected demand from the property sector, further complicated by Covid-19-related restrictions that continue to disrupt construction activity.
Australian coking coal prices drop $50/t
Australian coking coal prices, which were trending at elevated levels last month, have started to edge lower recording a drop of $50/t in the course of a week. Prices declined amid muted global steel demand and with Indian buyers moving to the sidelines amid availability of cheaper Chinese coke. Coking coal demand from Europe has reduced to the bare minimum amid an energy crisis in the EU and inflationary pressures. Around a 10th of EU’s steelmaking capacity has already gone offline, according to latest reports.
Limited merchant enquiries in India
The export duty on steel and sluggish domestic demand has impacted the Indian market, with steel (benchmark HRC) prices falling by INR 20,000/t since their highs in March this year.
Market participants informed that merchant enquiries for met coke are limited as users have inventories stocked up for the next one-and-a-half months. Amidst sluggish steel demand currently, any significant improvement in domestic met coke demand seems limited.
Outlook
Domestic met coke prices may drop further in case of a significant fall in coking coal and imported met coke prices. However, Chinese met coke producers are heard cutting production to trim losses which may support their export prices. In case of heavy rainfall in Australia in the coming days, coking coal supply disruptions may occur. However, given the inventory buildup with Indian and global steel manufacturers, coking coal prices are expected to drop further to around $230-250/t FOB Australia, industry insiders believe.
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