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Slack demand pulls down imported met coke rates

January 30: Prices of imported low ash metallurgical coke eased further on January 29 on lack of demand from steel-makers in India, traders said.

The price of imported met coke with CSR of 64 was quoted as low as $190 per ton CFR India on January 29, down by $3 per ton from the previous level of $193 per ton, they said

In fact, the price of met coke with CSR of 60 is quoted even further lower at about $185-$187 per ton, they added.

The price of imported met coke with CSR of 64 was quoted at $200 per ton CFR India as on January 1, 2015.

“But, even at current low levels, there is hardly any buyer,” a trader said.

“Most of the non-integrated steel-makers are facing a financial crunch because of prolonged period of low demand and subdued prices and many of them have cut production significantly in recent days, leading to low demand for imported met coke,” said another trader based out of Kolkata.

“A number of steel-makers based in eastern India have applied for corporate debt restructuring (CDR) and are practically not in a position to fund their purchases until and unless the bankers approve their proposal,” he said.

An official from a steel company with headquarters in Kolkata, but with a plant located in Odisha, recently told ICMW that they had filed for CDR, but it had not yet been accepted by the bankers.

“Already a number of such small steel-makers are operating at capacity utilisation of 60% or less because of multiple factors starting from low availability of iron ore to low demand for their material in the market,” an official from a steel company said.

“The industry is also waiting for Union Budget proposals to be placed on February 28 as it expects some positive announcement by the government on infrastructure spending. If that happens, the steel industry might get a booster but otherwise the situation looks quite depressed,” said another official.

According to some other experts, it is not only the financial crisis being faced by small steel-makers and low demand from the integrated steel-makers like SAIL, Tata Steel, JSW, JSPL or Essar that is affecting the overall pricing of met coke but low demand from non-integrated smaller players, whose combined share in India’s total steel production is much higher.

Most of the small steel-makers do not have their own coke ovens and depend on traders and merchant coke makers for imported and domestic material.

“On one hand, the small steel-makers are operating at low capacity utilisation and as such demand from them for imported or domestic coke is at a low ebb while, on the other hand, some integrated steel-makers, who earlier used to buy coke from the market, have stopped doing so and that is leading to excess availability of both domestic and imported met coke in the market,” a trader said.

“In fact, SAIL, which was procuring met coke from merchant manufacturers in 2012-13 and 2013-14 had significantly reduced its purchases of met coke from the market as its own cookeries, which were under renovation, are up and running. Because of this, there had been a sharp fall in demand for domestic met coke and consequently that has affected demand for the imported material as well,” said one expert.