Colombia's metallurgical coke exports are expected to drop below 3mn t this year after reaching a high of 3.1mn t in 2018, amid a contraction in global steel demand, according to Colombian coal federation Fenalcarbon's president, Juan Manuel Sanchez.
"Countries such as Spain, Italy and Mexico among others resented the increase in Chinese steel [supply], and the best way to regulate supply and demand was by lowering their steel production capacity," Sanchez told Argus. "Consequently, the markets are demanding less metallurgical coke and coking coal."
Fenalcarbon expects the decline in exports to take place in the third quarter. Shipments of met coke rose to 1.51mn t in January-June, up by 83,000t on the year, so the third-quarter contraction will be a result of steel companies' high stockpiles of met coke and steel, Sanchez said.
Brazil will continue to account for most of Colombia's met coke exports, followed by Mexico and India.
In response to the projected decline in demand, small producers have shut down as much as 200,000 t/yr of beehive ovens, reducing Colombia's production capacity to about 3.3mn t/yr. But the traditional met coke hearth furnaces controlled by the likes of Milpa — Colombia's largest coke exporter — Coquecol and Carbocoque remain open.
"For those companies, production cycles have increased, which in turn will result in lower production in the long term. But the idea is to keep the ovens on," Sanchez said.
Sanchez, who is also chief executive of Carbocoque, Colombia's third-largest met coke exporter, expects global met coke inventories to return to average levels towards the end of this year, which could increase met coke demand in the fourth quarter.
Carbocoque expects to export 450,000t of met coke this year, down by 50,000t from 500,000t last year.
Sanchez expects Colombia's coking coal exports to remain unchanged at around 1.8mn t this year, driven by demand from Brazil, Mexico and Japan.
The Argus assessment for Colombian mid-volatile coking coal stands at $122.60/t fob this week — its lowest since November 2016.News Source: Argus Media