India: Met coke prices fall on bearish steel market sentiments, reduced export demand

Indian domestic metallurgical (met) coke prices have declined significantly over the past week amidst subdued demand from steelmakers, alongside continued weakness in pig iron demand.

• Currently, prices for the 25-90 mm blast furnace (BF) grade met coke are assessed at INR 38,500/tonne (t) exy-Cuttack, down by INR 5,500/t (12.5%) on a w-o-w basis.
  
  
• Prices exy-Surat are assessed at INR 42,000/t, down by INR 3,000/t (6.7%) on the week. These prices are exclusive of GST @5%.
  
  

Those apart, Indian merchant coke makers are bearing the brunt of reduced demand in both domestic and the export markets.

Indian exports of met coke have dropped by almost 65% m-o-m following a demand slowdown in the overall Asian seaborne market, brought about by the swift downfall in import demand by Chinese buyers.

Until last month, however, Indian merchant met coke producers and overseas traders had been actively participating in the export market, owing to higher margins in comparison to domestic sales.

Met coke export shipments from India stood at 41,556 t in Nov'21, as against 119,390 t in Oct'21, as per vessel lineup compiled by CoalMint Statistics.

Indian pig iron, steel prices plummet on dull demand

Indian met coke prices continue to remain pressurized on account of slow demand from the country's pig iron producers, as well as a weak finished steel market.

Finished flat steel prices have gone down by INR 1,300/t w-o-w; while steel grade pig iron prices plunged by up to INR 2,400/t w-o-w. The sharpest fall was recorded in central India and is currently assessed at INR 37,700/t exw-Durgapur.

Australian coking coal prices hold steady

Australian coking coal prices have stabilized at considerably lower levels relative to their earlier highs, predominantly because Asian buyers were largely hesitant to procure seaborne materials amid the recent volatility.

The FOB price for the benchmark premium low-volatile grade of Australian hard coking coal has remained unchanged at $315.50/t for a second straight day on Wednesday, 1 Dec'21 after having fallen by 15% in the week-ago period.

The sharp decline in imported coking coal prices has, inevitably, aided the Indian met coke producers, who are primarily dependant on Australia for sourcing the coking coal required for coke production.

Meanwhile, however, Australian coking coal supplies still remain tight due to rainfall-induced weather disruptions in Queensland, Australia's main coking coal producing hub.

Outlook

Indian merchant met coke manufacturers have lately been able to curtail their offer prices in line with deteriorating prices of Australia-originated coking coal.

Nevertheless, near-term met coke prices remain volatile in view of the potential for uncertainty in Australian coking coal prices.

Adverse weather predictions suggest potential supply disruption for Australian materials in the short term. This would likely prevent any significant downward price revision by coke makers in India.

As for the correlation between met coke and pig iron ? Indian met coke prices would turn unviable for pig iron makers if the prices of pig iron decline any further from their current levels.