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Polish coke holds steady in EU as China tests the water

Source: CoalShastra, May 3, 2019

Polish metallurgical coke is holding its ground in Europe and Turkey in terms of both price and market share, despite some regional mills taking recent trial cargoes of Chinese and Colombian material.

High prices have for some time deterred European and Turkish mills from buying Chinese met coke, compounded by widespread concerns about quality. But the steep drop in Chinese export prices — to $318/t fob today from $401/t fob on 7 November for 65 CSR material, according to Argus assessments — has encouraged a few European end users to consider trials.

A mill in Italy recently took a trial cargo of Chinese met coke, and Turkey has also been open to testing Chinese met coke of varying quality.

It is not unusual for Chinese suppliers to attempt to build traction in Europe, and it is to be expected given how sharply fob China prices have come down, market participants said. But many are doubtful that Chinese suppliers will build much momentum, given Poland's strong presence and competing lower-priced material from Russia and Colombia.

Polish met coke prices came under pressure in recent months as fob China prices sank, but are now holding fairly steady, according to market participants, who cite an upper price level of around $330/t fob. One market participant estimated that Polish prices would need to be below this to achieve sales, noting fairly high regional freight costs.

But the general consensus among market participants is that Polish suppliers remain in the strongest position within the European market, with mills having built familiarity with their product and unlikely to experiment with new origins unless the terms are very persuasive — particularly in light of healthy inventories and long-term supply contracts.

A Turkish mill has just finalised a tender, seeking 50,000t of 64/65 CSR met coke for July arrival. Several origins are understood to have competed for the tender — including Chinese — but it is believed to have been awarded to a Russian supplier, given that the mill was initially aiming to pay no higher than $300/t cif Eregli, several market participants said.

Chinese suppliers have also been discussing a Turkish mill request for 40,000t of 65 CSR met coke for late-May/early-June loading. The mill is said to have been seeking below $280/t fob China, but Chinese exporters were reluctant to go below around $320/t fob.

In Europe, opinions differ as to whether fob China met coke prices have scope to come down further. Chinese suppliers have hiked prices in the past two weeks in an attempt to restore profit margins. But some Europeans see potential for fob China prices to fall further because of plentiful availability, albeit they are unlikely to go below the $300/t fob threshold for the time being, one European market participant said.


News Source: Argus Media