India: Met coke offers rise on rebounding coking coal; buyers turn reluctant

Selling offers for Indian domestic metallurgical (met) coke increased by INR 2,500-3,000/t this week as coking coal import prices rebounded by 7% w-o-w basis.

Offers for 25-90 mm blast furnace (BF) grade met coke are currently heard at INR 38,500-40,000/t ($508-528/t) in eastern India, and at INR 40,000-41,000/t ($528-541/t) in the western region. Prices are exclusive of 5% GST.

However, buyers are largely showing reluctance to accept these increased rates amid softened pig iron prices and sluggish downstream demand for finished steel.

Notably, the last trade deals of met coke were concluded at INR 35,500-36,000/t ex-Vizag.

Indian pig iron, steel prices plummet on dull demand

The blanket ban on construction activities in the northern states to curb air pollution, coupled with heavy rainfall in the southern states, are factors weighing on Indian steel demand since November.

Government data shows that the country's finished steel consumption in Nov'21 fell by 8% y-o-y and 3% m-o-m to 8.47 mn t.

On a w-o-w basis, finished flat steel prices have dropped by INR 1,300/t while steel grade pig iron prices plunged by up to INR 2,400/t and are currently assessed at INR 37,500/t exw-Durgapur.

Australian premium coking coal rebounds on weather concerns

Australia-origin seaborne coking coal prices increased this week on continuous rainfall and flooding in eastern Australia.

The benchmark premium low-vol grade jumped by 7% w-o-w on FOB basis amid deteriorating weather conditions in Australia's main coking coal production belt in Queensland.

Until recently, however, Indian met coke producers were supported by a sharp decline in imported coking coal prices that had fallen by 15% in the week-ago period.

Coke makers in India are primarily dependent on Australia for sourcing the coking coal required for coke production.

Outlook

Near-term met coke prices are expected to remain supported as coking coal prices would likely rise further on supply uncertainty caused by adverse weather predictions.

Heavy rains are forecasted throughout the month in Australia that could result in logistical disruptions and production losses for Australian coking coal.

Meanwhile, Indian met coke prices would turn unviable for pig iron makers if the demand and prices of pig iron decline any further from their current levels.