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Indian met coke prices fall further amid plunging coking coal prices, weak steel demand

  There seems to be no respite for domestic met coke manufacturers as prices have fallen by another INR 3,000/t w-o-w. The price for BF grade 64% CSR coke (25-90...

Met Coke
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24 Jun 2022, 19:39 IST
Indian met coke prices fall further amid plunging coking coal prices, weak steel demand

 

There seems to be no respite for domestic met coke manufacturers as prices have fallen by another INR 3,000/t w-o-w. The price for BF grade 64% CSR coke (25-90mm) are currently assessed at INR 43,000/t in the eastern Indian markets, while in the western belt hardly any offers were heard amid lack of inquires in the market.

It has been a month since the Indian government decided to impose a 15% export duty on steel, thereby impacting about 95% of total finished steel exports. After the decision, both steel and coke prices have fallen sharply as the domestic demand has turned sluggish.

 

Flat steel prices have decreased by INR 6,000/t in the last one month and are currently assessed at INR 59,200/t exy-Delhi, whereas steel grade pig iron prices have corrected by INR 3,400/t to INR 45,300/t exw-Durgapur.

Why is steel demand tepid?

As the monsoon draws near, construction activities hit a slow track, while the other steel-consuming sectors are already reeling under slow demand amid inflation.

In response, some primary steel mills are mulling production cuts or are advancing the shutdown of facilities for maintenance, while some secondary mills have reduced production.

Coking coal prices plunge $170/t m-o-m

Another factor that is contributing to the fall in coke prices is the plunge in coking coal prices in the last one month. Premium grade Australian coking coal prices have fallen by $170/t m-o-m in June, while on w-o-w basis it has come down by $29/t.

This decline has come amid global steel demand turning tepid and Indian buyers taking a step back post duty announcement. India, the second largest steel producer, procures 75-80% of its coking coal requirement from Australia.

Met coke sellers react

However, it is a difficult situation for domestic coke manufacturers as coke which is currently being offered in the market was produced from costlier coking coal bought in March, April and May.

"We are already incurring a loss of INR 12,000-13,000/t given the higher conversion cost from coking coal bought in previous months. Even if we take current coking coal prices of $377/t CNF India, coke conversion cost would still stand higher as against the rate at which we are selling," said a coke seller based in eastern India.

In the case of Chinese coke, there are no offers in the market given the lack of interest of Indian buyers.

Outlook

As per CoalMint analysis, bearish sentiments in the steel market are likely to continue during monsoon. This, coupled with the continuous fall in coking coal prices, would force Indian met coke producers to lower prices further in the near term.

 

24 Jun 2022, 19:39 IST

 

 

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