India: Domestic met coke prices unchanged, but uptrend likely on rising exports

Domestic prices of Indian blast furnace (BF) grade metallurgical (met) coke have remained unchanged over the past week owing to a stable supply-demand trend despite rising coking coal prices.

Prices for the 25-90 mm BF-grade material are currently assessed at INR 48,000/tonne (t)-INR 49,000/t along the country's western and eastern coasts respectively.

Steady increase in Australian coking coal prices

Indian met coke manufacturers primarily consume Australia-sourced coking coal for producing the BF grade 25-90 mm material.

With coking coal prices shooting up after being volatile for two weeks amid healthy spot demand, prices of the seaborne material to India are only going to rise, eventually increasing domestically manufactured met coke costs.

Prices for the premium low-volatile (PLV) grade of Australian hard coking coal (HCC) were hovering at around $390-$395/t FOB Australia in the last week.

Steel demand to pick up in Q4

The Indian steel industry's performance was mostly sluggish initially because of the second wave of Covid-19 that hit in mid-Feb'21, and due to the delayed monsoon along with low overseas and domestic demand in Q3.

October looks optimistic for the steel market with the upcoming festive season and increasing demand for consumer products.

Indian steelmaking and thus imports of both coking coal and met coke are expected to increase in Q4 of 2021 and more rapidly from early-2022, as per Australia's Department of Industry, Innovation and Science.

Lucrative export market

Export shipments from India in CY'21 till Sept'21 were at 0.71 million tonne (mn t) as assessed by CoalMint, a whopping 707% y-o-y increase compared to last year's 0.08 mn t. These levels are only going to rise.

With the shift in trading dynamics, as China is out of the export market and mostly dependent on imports coupled with rising met coke prices, the export market is turning out to be beneficial for India.

A total quantity of 0.126 mn t has been exported so far in Sept'21. Major export destinations were Vietnam, Australia, Malaysia, Italy and China.

These shipments were made by leading eastern India-based merchant coke producers. It is expected that this trend would continue for the current month too and the remaining part of the year.

Recent trade deals

A prominent merchant met coke producer based on the east coast has reportedly booked an export deal for 31,500 t of met coke to be dispatched from Paradip Port, Odisha. The shipment is expected to sail next week. More export deal talks are on.

Another southern India-based met coke manufacturer has reportedly concluded a deal domestically at INR 48,500/t.

Outlook

Presently, Australian coking coal prices are shooting up after a brief period of minor corrections over the past two weeks. Prices are expected to rise further on robust buying interest in the ex-China Asian market alongside limited spot availability.

Consequently, domestic met coke prices are expected to rise in line with higher coking coal prices.

Exports are expected to continue the uptrend, since these now look lucrative.

With the expected increase in domestic steel demand due to the upcoming festive season, met coke demand is expected to rise as well, thereby increasing domestic procurement as well as imports.