Weak demand dampens sentiment at Eurocoke
Ranjana von Wendland
Falling European steel output, strong steel imports and ample availability of raw materials were major themes at the Eurocoke conference in Vienna last week.
Market participants told McCloskey that poor demand from Europe and Asia was forcing United States coal miners to implement both production and wage cuts, while European buyers were contending with rising stockpiles at steel mills and terminals.
Attendees from Colombia highlighted how slow prices for met coke were forcing producers to curtail production.
“There are cokeries in Cucuta and Boyaca curtailing production, some by as much as 70%,” a coke producer said.
Colombian met coke prices have fallen sharply with McCloskey’s weekly Barranquilla CSR 65/63 at $256.00/t FOB for the week ending 20 September, down from around $320/t FOB same time a year earlier.
Increased competition from Indonesian met coke imports was on display as news came of such a cargo, originally bought for Europe by a steelmaker, understood to be for sale, highlighting weak demand for raw materials in Europe.
The cargo was originally secured at around $245/t FOB for September loading but given the lack of demand in Europe was expected to be sold at a minimum $5-10/t FOB discount. Buyers from Latin America or Asia are thought possible candidates to purchase the cargo.
European steel mills expect total output this year at around 126.00 mt, slightly lower than last year at 126.30 mt.
Several market participants also pointed to high energy costs, inflation and the costs of the Ukrainian war putting pressure on European steel demand with recovery anticipated from the second half of next year.
Mills are also feeling pressure from low steel prices with hot rolled coil (HRC) prices at just over €600/t, ex works, in northern Europe, according to mill sources.
“The margins are wafer thin but there is no plan to idle any blast furnaces as raw material prices are low and free carbon allocations are available. However, if steel prices do not recover by December maybe some mills will idle 1-2 blast furnaces,” a procurement manager said.
Recent falls in the price of prime hard coking coal (PHCC) was another theme, given it is this material from Australia that dictates the prices of United States coking coal.
“If a buyer wants to secure material they are asking for huge discounts to existing prices which is unsustainable,” a US producer said.
McCloskey’s daily MCC1 prime hard low-vol coking coal price assessments have fallen to $187.75/t FOB on 23 September, down from $311.25/t FOB a year earlier, while weekly USEC low-vol prices are at $194.00/t FOB for the week ending 20 September, down from $248.50/t FOB a year earlier.
Market participants said prices are being capped partially because there was no clear direction from Chinese or Indian buyers regarding securing US supply.
“We are mostly focussed on domestic US business but if low prices persist some US producers may introduce production cuts,” a second US producer said.
Chinese steel production stood at 613.70 mt in January-July, down 2.2% year on year.
“At present none of the Chinese steel mills are curtailing production and even cokeries are producing coke despite low demand. A lot of the Chinese material is being exported,” a Chinese coke producer said.
“Mills in China are making losses, but they will continue making losses until one of them shuts down or is overtaken by another one,” the producer added.
The second half of 2025 is when market participants expect stability to kick in post US elections and more clarity emerges around Chinese steel output.