Asian spot prices for metallurgical coke have gone up further due to the increasing imports by Chinese end-users and traders.
China, for years the world's largest exporter of met coke, became a net importer this year for the first time in more than 20 years. The country's coke imports have increased steadily since July this year, while exports for most months stayed lower than last year.
Firm domestic demand against tight supply
In China, domestic coke supply has tightened because of coking coal shortage limiting production, while coke demand stayed relatively firm due to full-fledged blast furnace capacity utilization at steel mills.
The recently rumored ban on Australian coking coal imports has aggravated the persistent shortage of coking coal and lead to increased met coke prices.
In addition, an appreciation of the Yuan against the dollar is attracting Chinese buyers to opt for higher imports of met coke.
The strong Chinese demand for met coke, after widespread capacity cuts hit domestic output, has created availability tightness in the global met coke market, with a severe supply shortage expected to continue in the coming months.
Buyers turn toward alternatives for non-Australian coal and coke
Coal importers in China have turned away from the seaborne market following the widespread rumor on the country's possible ban on Australian coal imports.
The rumor, having emerged in the Chinese market after the National Day holidays over October 1-8, stated that some domestic power plants and steel mills had been orally notified of temporarily suspending Australian coal imports, without any tentative date mentioned regarding the termination of the initiative.
Chinese steelmakers are presently showing no urgency to procure seaborne material despite several cargoes waiting to be sold as port stocks. Instead, majority of the steelmakers prefer to wait for port related matters to ease.
Although it is difficult to substitute Australian premium hard coking coal, Chinese steelmakers have multiple alternative seaborne origins for sourcing met coke such as Poland, Japan, South Korea and Russia.
CNF China prices for met coke are currently assessed at $275/t (Poland), $270/t (Japan), $265/t (South Korea) and $263/t (Russia).
By Aditya Sinha