EU met coke stocks drop as mills track China price cuts

European market participants are closely monitoring the recent downturn in seaborne metallurgical coke price, and those with low inventories may emerge to buy on the spot market in the coming weeks.

The Argus daily fob north China price for 62 CSR met coke is at $323/t, down from a 2018 high of $390.85/t fob on 7 November. The daily assessment for 65 CSR met coke has dropped to $334/t fob north China from $401/t over the same period.

"Met coke prices have come down quite a bit in the past two months," a European market participant said, adding that lately there has been "a big gap between what some spot traders are targeting and what is achievable", which has further delayed new European bookings.

"Before Christmas, some Europeans were pretty bearish on their short-term order books for this period," another market participant said, agreeing that prior expectations of lower steel production in January owing to outages may have contributed to a more conservative approach to met coke restocking.

"I think there was a perception among customers late last year that everything was on a downward trend and if you waited you would get a better deal later," a trader said. But some European mills are uncertain about their steel output in the coming months because of various headwinds, including the automotive outlook, so are still unsure about how much additional met coke they might need, he said. This might make them more inclined to buy small tonnages from ARA stocks — probably originating in Russia or Poland — rather than order a full cargo from China or Colombia, he said.

Polish met coke is largely locked up in term contracts, but regular customers can probably secure some extra spot tonnes if needed. Colombian met coke prices are understood to be maintaining their typical relationship to fob China indexes. A market participant pegged Colombian met coke offers at around $305-315/t fob depending on grade.

Colombian suppliers have voiced concerns about the seaborne market's downtrend, but are not greatly concerned as underlying met coke demand fundamentals remain robust. The country's met coke exporters are "receiving more purchase orders than ever before" and should experience a strong 2019, a Colombian market participant said.

Russia's Mechel today confirmed the extension of its met coke supply contract with Turkey's Kardemir, which entails a 70pc year-on-year rise in deliveries to 200,000t for 2019. The shipments will be dispatched from the Mechel Temryuk port in Krasnodarsky Krai, with the price negotiated each quarter.