Colombian met coke output drops, market conditions bite

Colombian metallurgical coke producers have reduced output in recent months, adjusting to lower seaborne demand and prices.

Local market participants estimate that Colombia's met coke production capacity — which stood at 3.5mn t/yr last year — has been cut by 500,000t as plants turn off certain ovens, in some cases because of maintenance work.

Multiple sources said production cuts are being implemented by some companies including Coquecol, Minercoque and Pinzon Martinez.

"In January, companies produced met coke and could not sell [some of] it. In the second month, they continued to produce and once again stockpiled coke. In the third month, they didn't have space to keep stockpiling or cash to continue buying coking coal. This resulted in a situation that has forced producers to turn off ovens," one market participant said.

Coquecol confirmed that it has turned off some ovens with a combined capacity of 70,000 t/yr in the municipality of Cucunuba. The company pointed to tighter environmental regulations, which have forced the it to take this step. Coquecol restarted these ovens in 2017 to take advantage of rising seaborne met coke prices.

Coquecol also restarted an idled coke battery in January in Samaca, which added a further 70,000 t/yr to its met coke production. The firm is estimated to have met coke production capacity of 250,000 t/yr, including idled ovens.

A spokesperson for Pinzon Martinez said some of its met coke production facilities are off line for maintenance. Minercoque had not responded to requests for comment by the time Argus went to press.

Yilcoque - which is owned by Turkey's Yildirim Holding - told Argus it has no plans to reduce output and continues to produce around 14,500t/month of coke, requiring 23,500t/month of coking coal.

Argus assessed 65 CSR met coke at $330/t fob north China today, up by $7/t week on week, but still down sharply from last year's high of $401/t fob on 1-5 November.

With met coke market conditions becoming more challenging, Colombian producers have pushed for lower domestic coking coal prices, with market participants noting steep cuts recently.

"Coke companies have become more demanding. Nowadays, they want coking coal with a maximum of 10pc ash content when previously they would take 12pc," a coking coal producer in Boyaca said.