India: Met coke prices stable; Chinese import offers more viable

Indian met coke producers have kept offers stable over the last two weeks. Current offers for blast furnace grade met coke (25-90mm) are heard at INR 43,500-44,000/t ex-Jajpur.

Offers are stable despite the surge in coking coal prices that have gone up by $13/t in a week's time to $363/t FOB Haypoint, Australia. Coking coal prices have surged with improving trade relations between China and Australia. However, Chinese market players are interested in domestic material due to competitive prices.

"Chinese met coke prices at around $450/t CNF Hazira would be viable for steelmaking compared to current domestic offers. Chinese coke prices are at $433/t CNF Hazira, which is competitive compared to domestic prices. Hence, steel mills would prefer more of imports than domestic," a source said.

Despite price variation in the overseas and domestic markets, Chinese offers are still on the lower side. The China Meteorological Administration (CMA) has forecast heavy rain in southern China between 7-16 February which may further impact import prices.

China is ready to receive coal imports from Australia, with several shipments having arrived or been routed to the nation. It is a strong indication that the two countries are gradually resuming coal trades after more than two years of stalemate. According to Kpler's cargo-tracking data, a total of five coal cargoes were delivered, scheduled or are in transit from Australia to China in January and February.

Market sources earlier shared that a number of Chinese traders were working on coal imports from Australia.

Australia used to be China's top coking coal supplier with roughly 2-3 mnt of shipments a month. It was also a key thermal coal supplier, second only to Indonesia in terms of volumes. In 2019, the year before China's unofficial ban was introduced, the nation imported 76.96 mnt of coal from Australia, Chinese customs data show.

India steel scenario

Finished steel production in India increased by 5% y-o-y to 98.26 mnt during April-January of FY'23 as against 93.41 mnt in the same period of the last fiscal. India's finished steel exports rose by 33% m-o-m to 0.58 mnt in January from 0.44 mnt a month ago. The rollback of the 15% export duty in November boosted export bookings from India.

Outlook

Met coke prices are expected to rise in the near term to reflect the rise in met coal prices. Also, post-Lunar New Year restocking activities coupled with already-low met coke inventory at Chinese ports will drive prices higher. Moreover, the surge in construction activities in China from March onwards is expected to boost prices further.