Indonesian metallurgical coke output is to climb after delays complicated by a sluggish market, as Chinese-backed firms gradually start operations at the Indonesia Morowali Industrial Park (IMIP).

 

De Tian Coking started production with its first coke oven on 28 August, with projected output for 2023 less than 1.3mn t.

 

Risun Wei Shan New Energy ignited its second coke oven on 27 July, with production expected to begin from the end of October. This came shortly after the plant's first coke oven with capacity of 800,000 t/yr started production on 19 July. The plant plans for a progressive launch of the third and fourth coke ovens of similar capacity by the end of this year, with an estimated 500,000-600,000t total output in 2023.

 

Dexin Steel anticipates 2.05mn t of coke output this year following its second phase capacity ramp-up, with over 70pc of total coking capacity already launched.

 

The roll-out pace has slowed for the IMIP projects of around 18.8mn t of metallurgical coke capacity, which were scheduled to start by the first half of 2023. Production at Kinxiang New Energy was expected to begin earlier this year. But its coke oven launch has been delayed as market conditions have not been optimistic for coke prices, said several market participants.

 

Indonesian coke prices typically follow the price trends of Chinese coke. Export prices of Chinese coke hit a three-year low in June after being on a sustained downtrend during this year's second quarter on weaker downstream demand. The Argus 65 CSR met coke index fell nearly 40pc from mid-March to $281.45/t fob China in late June. Prices have since rebounded, with the same assessment up by 17pc to $330.85/t fob China on 28 August.

 

Indonesian year-on-year coke exports more than quadrupled during January-June at 382,914t, according to Indonesian customs data. India emerged as the top importer Indonesia coke with a share of 59pc in the first half. Competitive prices and consistent coking quality continue to drive demand for Indonesian coke from countries like India, Vietnam, Malaysia and Australia. Tighter availability of Australian hard coking coal kept prices at elevated levels, making it an economical choice for some buyers to import more coke instead of coking coal as an option to reduce costs.

 

Total Indonesian hard coking coal (HCC) imports from Australia in January-June were 1.78mn t, up by 51pc on a year earlier. Indonesian coke plants currently import an estimated 20-50pc of HCC on a term contract basis, a coke supplier suggested. Suppliers expect steady spot trades in the short term with production at IMIP coke ovens gradually increasing. Indonesian HCC spot trades longer term could fall if IMIP coke plants increase term contract volumes for supply stability and to avoid downside risks in the case of price fluctuations, although contracted proportion for the year ahead are still pending discussions.

 

The Argus fob Australia premium low-volatile hard coking coal assessment was $265.90/t on a fob basis on 28 August. argusmedia