Coal news and updates

Met coke prices seen firming up marginally

April 3: Prices of metallurgical (met) coke are likely to firm up a bit after witnessing their steepest fall in recent days on account of low demand and softness in coking coal prices, feel industry sources in India.

Prices of imported met coke fell to around $210 per ton CFR India on April 2 from a high of around $250 per ton on February 27, $265 per ton on January 31 and $275 per ton towards the end of November, 2013.

"Met coke prices have fallen too much in recent days. Now they should start going up considering the fact that coking coal prices too are likely to firm up amidst higher demand," an official with a leading coke-maker told ICMW.

The indicative spot prices of coking coal, which were ruling at about $142.50 per ton towards the end of November 2013, fell to $126 per ton by end-January, 2014 and further to $107 per ton in mid-March before recovering to $112 per ton on April 2.

The official, however, said that at current prices, domestic met coke-makers are incurring losses because they are under pressure to keep the prices of their products low in the wake of higher imports of Chinese met coke at much lower prices.

"Currently, Chinese met coke is being offered in the Indian market at $205-$208 per ton and, as such, domestic met coke makers are under pressure to match those prices," said a trader.

"We are still getting imported coking coal at previously contracted prices of around $143 per ton FOB, even as spot prices have fallen to $108 per ton. Once the material booked at about $108 per ton starts arriving, then the situation will improve a bit for us," the official said.

The official from the coke-making company, however, feels any major improvement in coke prices is unlikely because of an overall bearish trend prevailing among major coal consuming sectors. "Steel and cement sectors are not doing well at present and until and unless their prospects start looking up, the situation will not improve," said the official

"It is expected that demand for steel and cement in India will not improve dramatically, till the expenditure on infrastructure projects are increased, which is unlikely to happen till a new government comes to power after the general elections. Also the demand for these two products will improve significantly once the 7th Pay Commission for government employees comes to into force," he added.

"At present, all railways and roads projects are virtually at a standstill. There is immense scope for starting work in the railways sector where nearly 60% of the total tracks are yet to be electrified and a large section is still being served by single tracks," the official said.

Even the construction sector is not doing well in India and till the government offers some incentive to this sector along with financial support to the Railways, the situation will not improve, he added.

Commenting on overall future scenario of met coke in India, a third source said, "The current dull sentiment is likely to continue at least till May when a new government will be formed."

He, however, feels "If the UPA-led by the Congress or NDA led by the BJP comes to power, then they will be under pressure to perform and this would augur well for the economy as a whole. But if by any chance a third front government comes to power, then situation would not be an ideal one for the industry."