Indian met coke makers reduce capacity utlisation to one third amid rising imports

Indian met coke or metallurgical coal producers are operating at 30-35 per cent of their capacities (one-third of their installed capacity) in the face of increased imports. Many facilities have also shut down in the face of losing domestic market shares, says Dipak Agarwalla, President, Indian Metallurgical Coke Manufacturers (IMCOM).

Met coke is a key steel making feedstock; and India is the second largest crude steel maker in the world.

Imports of met coke on an annualised basis increased 10.3 lakh tonnes-a 40 per cent rise on a y-o-y basis. The market shares of imports relative to total demand also increased from 42 per cent in FY22 to 52 per cent in April – December (on an annualised basis).

According to Agarwalla, imposing anti-dumping duty on imports is another way.

DGTR probe

Incidentally, the Directorate General of Trade Remedies (DGTR) has initiated a probe into allegations of rising imports of low ash metallurgical coke (also called met coke) – of ash content less than 18 per cent. The investigation into initiating safeguard duties follow after five companies submitted a complaint claiming that rising imports of low ash met coke was impacting domestic producers.

The five companies which had reached out to the DGTR include BLA Private Ltd, Jindal Coke, Saurashtra Fuels, Vedanta Malco Energy and Vista Coke. These companies account for majority of the met coke produced in India.

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“Of the installed capacities of 7 million tonnes per annum (mtpa) of met coke production by merchant producers, around 2 million tonnes are being used at the moment. Imports are eating into the share of domestic players,” he told businessline.

Merchant producers are those who produce and supply met coke to steel mills or for other segments like klins, chemcials, foundries and so on.

Policy intervention

Agarwalla, through the association, is also seeking policy intervention from the Centre, especially in terms of coking coal prices. Coking coal is a key raw material for metcoke-makers.

He points out that the global sea-borne trade of coking coal is around 300 mtpa. And the trade pricing is largely driven and benchmarked by Global Commodity Insights platforms basis which trades and deals are executed.

Currently, the met coke import price to India (basis the global commodity insights) is benchmarked around $345 per tonne, wherein coking coal (cost and freight to India) price is $239 per tonne (as on June 1). For domestic met coke producers to break even, the coking coal (CFR India) price should be $190 per tonne. This would allow Indian players to compete with met coke imports.

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“Only a very small and limited volume of seaborne trade is offered in the trading platform and benefits met coke producers that have captive coking coal resources. There are (also) multiple countries exporting significant volumes of coking coal which is not considered effectively by global commodity indices,” he said.