India's metallurgical coke imports rise 14% y-o-y in CY'23
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*Hot metal output up nearly 8% y-o-y
*Imports cheaper than domestic coke due to PHCC price surge
*Coke imports may remain on the higher side in CY'24
Morning Brief:India's demand for metallurgical coke in steelmaking increased by 7.5% y-o-y to over 35 million tonnes (mnt) in CY'23 from 32.8 mnt in CY'22, and while domestic production witnessed a marginal growth imports rose by around 14% y-o-y, as per data available with BigMint.
Coke demand increased on higher production of crude steel through the BF -BOF route, with hot metal production rising by 7.5% y-o-y to 86 mnt in CY'23. Demand for met coke in other areas of ferrous metallurgy such as sinter and pellet production and the ferroalloys and foundry sectors stood at around 11 mnt, data show-largely stable compared with 10 mnt in CY'22. 
Imports of met coke were recorded at 3.83 mnt in the year gone by, which was higher by 14% on the year compared with 3.35 mnt in CY'22. The leading exporting countries were Poland and China with shipments of 890,000 t and 710,000 t, respectively, followed by Columbia, Indonesia and Japan.
Why did coke imports increase?
*Import prices lower than domestic: Imported met coke prices throughout CY'23 remained more attractive than domestic prices due to higher imported coking coal prices. BigMint assessed average landed prices of imported Chinese coke at INR 34,125/t ex-Gujarat, western India, while domestic prices were recorded at INR 37,800/t ex-Gujarat. So, the influx of imports was largely due to the fact that imported prices were lower than even the cost of production of domestic coke producers.
*Moderate growth in domestic production: India's merchant met coke production was assessed at 3.43 mnt in CY'23 compared with 3.19 mnt in CY'22, an increase of 7.5% y-o-y. The domestic production growth rate was slow in view of surging crude steel production and coke demand, and domestic capacity utilisation remained restricted due to higher imports.
*Coking coal prices surge: Premium hard Australian coking coal (PHCC) prices rose by 60% in H2CY'23 and increasing volatility amid a narrow supply base impacted Indian importers. As India's dependence on prime coking coal imports is around 90-95%, the surge in prices also pushed domestic coke production prices higher making them unattractive compared with imported prices.
*Higher Chinese coke production: Chinese met coke production increased by over 4% y-o-y to nearly 490 mnt from around 470 mnt in CY'22. As domestic demand in China sagged amid subdued demand from the steel sector, higher volumes were available for exports. Notably, although direct coke exports from China fell y-o-y, indirect exports surged dramatically. For example, exports from Indonesia surged 190% y-o-y. Indonesia has seen a sharp rise in coke-making capacity financed by Chinese investments, which far outstrips its domestic requirements.
Outlook
India's crude steel production growth through the hot metal route is expected to be around 7-8% in CY'24, with around 18 mnt of short-term capacity addition in the pipeline. So, BigMint estimates coke imports to edge up, as higher global coking coal prices are likely to keep impacting domestic coke producers.
On the other hand, Chinese steel demand is forecast to stagnate further weighed down by the real estate sector. So, soft domestic demand in China may result in higher export volumes. India is likely to remain the most preferred destination for global coke suppliers due to steady growth in steel demand and production.
