Met coke prices rise as supply concerns mount amid higher demand from China

Global spot prices for imported metallurgical coke have been rising consistently owing to a combination of three major factors.

The driving factors depend on the Chinese market fundamentals because China, having the world's largest steel output, is also the largest worldwide consumer of met coke.

I. The strong domestic demand for met coke has emerged in China with widespread capacity cuts, amid coking coal supply tightness, limiting met coke production.

II. Repercussions of the reported ban on Australian coal exports to China is aggravating the country's coking coal shortage and leading to a global tightness in the met coke market.

III. A strengthening of the Yuan against the dollar is attracting buyers in China to opt for higher imports of met coke.

China's met coke production declining amid coking coal shortage

China's met coke output kept declining this year, as numerous cokeries deepened production curbs in a wide range due to the shortage of raw material supply.

Coke stocks at steel mills and ports have drastically fallen as a result, pushing spot prices higher. China has turned into a net importer of met coke for the first time in several years, with a severe supply shortage expected to continue in the coming months.

In addition, China's domestically-produced met coke prices would inevitably shoot up further, if the country's coking plants were obliged to source coking coal from domestic producers and stop importing from Australia.

Chinese currency appreciation resulting in higher import demand

China's Yuan is rallying sharply against the dollar, climbing to its highest level since May 2019, following the country's economic recovery in recent months.

While analysts believe the Yuan will remain strong against the dollar in the long term owing to the latter's weak performance, met coke market participants anticipate higher willingness for imports from buyers in China.

Indian met coke imports surge in September

Indian met coke imports have increased for the third consecutive month in September as the spot demand for imported met coke has been recovering swiftly with domestic steel production continuing at optimum levels at all major blast furnaces.

India imported 260,665 t of met coke in September -- up by nearly 55% month-on-month as against 168,331 t imported during the previous month of August.

More importantly, the country's met coke imports surged by as much as 58% on the quarter to 584,828 in Q2 FY21 (July-September), compared with 371,069 t in Q1 FY21 (April-June).

India Coal Import Vessel Lineup

CoalMint's latest vessel lineup data reveals that an aggregate shipment volume of 112,333 t of imported met coke is expected to reach India in this month -- 66,836 t at Hazira, 23,000 t at Paradip, 14,700 t at Haldia and 7,797 t at Vizag port.

Notably, all of these inbound met coke consignments are being sourced from two countries, viz. Poland (66,836 t) and Colombia (45,497 t).

Price Assessments

Chinese-origin met coke export prices are currently assessed at around $331/t and $312/t for the 64% CSR and the 62% CSR grades respectively on FOB North China basis.

CNF India prices for the 25-90 mm blast furnace grade met coke are currently assessed at $292-295/t (Japan), $285-290/t (Poland) and $288-293/t (Colombia).

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By Aditya Sinha