Colombian met coke producers cut output

Most of Colombia's largest metallurgic coke producers and exporters have cut production as international buyers defer metallurgic coke purchases amid the Covid-19 pandemic.

The largest producers have reduced their production capacity of about 3.5mn t/yr by 40pc, according to Argus estimates.

Colombia's largest metallurgic coke producer and exporter, Milpa, has cut production in light of European customers deferring purchases amid the coronavirus pandemic. The producer cut output by 40pc to 36,000 t/month two weeks ago. Some companies, including Carbones Andinos, have followed suit.

Firms are extending the production cycles in their units to 96 hours, from 72 hours before the slowdown started, a large metallurgic coke producer and exporter said.

But Coquecol, one of Colombia's largest producers and exporters, has not yet extended production cycles as it still has some cargoes to fulfill. "It is true that the production cycles have been extended for the majority of metallurgic coke companies. We have not done so because we have to fulfill some shipments. We hope we will not have to declare force majeure on those shipments," a Coquecol executive said.

A metallurgic coke exporter that used to ship 25,000 t/month said an international buyer has asked to defer a shipment to September-October from July because the company is seeing plummeting demand from automakers.

"Commitments have been postponed. We think most commitments will be postponed until 2021," the executive said, noting that a letter of credit is no longer a guarantee.

A medium-sized metallurgic coke producer will shut 22 hearth furnaces and 54 beehive ovens this weekend. "We will carry on with maintenance in the meantime," he said.

A Coquecol executive said the global slowdown is going to hit the coal production chain across the board, including exporters. Colombian coal association Fenalcarbon declined to comment.

Milpa expects a difficult second quarter, with production reduced by 40pc in April-June. A recovery is expected in the second half of the year.

Colombia originally imposed a 19-day quarantine from 25 March, but president Ivan Duque has extended this to April 26.

Coal mining has been exempted for quarantine restrictions, but many companies have partially halted activities. Milpa has sent half of its 1,800 workforce on a paid leave in a bid to reduce coking coal production from its units and associated companies.

Boyaca coal association, Fedecarboy has ordered mine workers older than 60 or those with pre-existing medical conditions to go home, calling for only basic production and maintenance operations to take place at Boyaca mining units.

Metallurgic coke producers are anticipating a reduction in international coke prices, which will further reduce the competitiveness of their business.

By Diana Delgado