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Have coking coal & met coke prices bottomed out?

The recent stable trend in coking coal and metallurgical coke prices, despite the not-so-encouraging demand from China, is prompting many experts to conclude that the prices have bottomed out even though others feel that prices may fall a bit further at least till the first quarter (Q1) of 2016.

As far as coking coal is concerned, Doyle Trading Consultants (DTC) said in its report on December 28 that coking coal prices are leveling off, which supports their thesis that prices are in the early stage of bottoming out.

However, traders in Kolkata feel that prices will continue to fall in the absence of offers from China and it is difficult to say whether it has bottomed out or not.

The current price of branded coking coal, as per globalCOAL's coking coal platform, was reported at $77.50 per ton FOB for delivery in January, but as per ICMW's assessment, price of the premium category (Peaks Down) coking coal was quoted at about $75.50 per ton FOB.

The situation is more or less similar for metallurgical coke, which continues its downward journey in the absence of offers, amidst a bleak possibility of any revival.

"There is hardly any offer for met coke from Indian buyers and the prices are already at rock-bottom levels of around $120 per ton CIF India. It is a blood-bath and I don't see any possibility of a major recovery at least till the first quarter (Q1) of 2016," said another trader.

"I think the prices of imported met coke will fall further as there is hardly any buyer in the market. Even a few existing ones are looking for credit facility and as such deals are not getting finalised in most of the cases," he said.

According to a third trader of met coke, the price of Chinese met coke had fallen to a level of $115 per ton in the year 2005 and current rates are hovering around this level.

According to ICMW's assessment, the current price of imported met coke is around $118 per ton.

"I think the price of Chinese-origin met coke may touch $100 per ton in the next few weeks, but after that we may see a recovery. But that recovery too will depend on the market demand-supply situation," the trader said.

Asked if he expects met coke prices to rule below $100 per ton after Q1 of 2016, the trader said, "That looks a bit difficult because at a price below $100 per ton, the producers will not be able to recover not only the manufacturing cost, but also the transportation cost."

He pointed out that in China, met coke is not being produced in huge quantities in Shanxi province now-a-days and the material is coming from even more interior regions.

"That means, the cost of transportation is going up and in some cases it might be matching the cost of production itself. In such a scenario, the price of met coke may not remain below $100 per ton for long," the trader felt.

Source: ICMW