“International Market for

Metallurgical Coke”

Andrew Jones
Resource-Net
Brussels, Belgium

Steelhome Annual Conference

Shanghai
April 2014

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Opening Comments
Some explanations to avoid any potential confusion:
This presentation will refer to metallurgical coke, the
product derived from the destructive distillation of coking
coal.
“Resource-Net” produces research publications on world
markets for coke, as well as related products such as
coking coal and anthracite i.e. about pricing, supply and
demand.
We are not trading coke or any other commodity. Nor are
we involved in any commercial activity related to these
markets.

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 Description of Metallurgical Coke
Definition of coke: the solid residue
formed when bituminous coal is
heated strongly in the absence of air
under pressure.
Methods of production: most
commonly in vertical batteries (90-
95% of world total) from which by-
products - tar, CO gas, ammonia -
are recovered;
In horizontal non-recovery batteries
in which by-products are burned
internally;
Minor production from “bee-hive”
plants - small-scale primitive ovens
- remains in some countries.

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Coke Market Structure - 2013

Sector M tonnes % of total
Blast Furnaces for Iron Ore Reduction (30/90mm) 600 89%
Cupola Furnaces needing Foundry Coke (>80mm, low 10 1%
ash)
Non-Ferrous Uses (10/30mm typical, reactivity CRI 10 1%
also important)
Breeze (<10mm), Available for Sintering & 60 9%
Pelletizing of Ores
Total 680 100%
(Above data are very aproximate...)

Of world coke production, 70-75% is situated on steelmaking sites for

captive use, balance typically in coal-mining areas.
In 2001-08, 6-8% of coke production was traded across borders; since
2009 just 3-4%.
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 Monthly Market Prices Reported
by “Resource-Net”
Grade Basis, $/tonne Market Characterisitcs
Blast Furnace Coke Europe cfr, Main benchmark for the coke market, accounting for most of world trade. In the
(30/90mm) India cfr, blast furnace, injection of coal, gas or other materials can cut coke rate.
China fob
Nut Coke (10/25mm) Europe cfr, Reductant in electric-arc furnace and other processes (e.g. ferroalloys, calcium
China fob carbide). Options exist for coke replacement. Apart from ferroalloys, this market is
in decline outside China.
Foundry Coke Delivered Cupola furnaces (iron castings, stone wool). Long-term decline in iron foundry
(80/220mm, ash 10%) Europe (Euro), volumes in developed regions.
China fob
Coke Breeze Europe cfr Used as fuel in ore-sintering and electrodes. Pricing tends to be “localized” due to
(0/10mm) relatively low value, so limited opportunities for international trade.
Anthracite Lumps Europe cfr When volatiles are less than 5-6%, anthracite lumps can be used as coke
(10/100mm) & Fines replacement in industries such as soda ash, ferroalloys and sugar production.
(0/10mm) Pricing is typically 50-60% of metallurgical coke.

Coking Coal Australia fob, Import pricing (cfr) for Chinese market has become more meaningful than “fob”
spot & contract indications traditionally quoted.
China cfr

Prices obtained by informal communication with industry participants i.e. traders, consumers.
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Market Influences
Chinese Export Prices: From 2008 to 2012, most potential transactions from China
were not workable due to rise in export tax to 40% (from 25%). But from
01/2013, Chinese pricing again became a major influence on world markets, as
export tax was cancelled.

Demand for Coke: Unlike other process plants, by-product recovery batteries
cannot be allowed to go cold without risk of damage to their structure. Hence, in
a severe market downturn the production of coke continues at a rate above that
required by the market.

Battery Constructions & Shutdowns: Rebuilds (needed every 30-40 years) are
expensive due to environmental regulations. Since the onset of the “economic
crisis” in 2008, 21m tpy of capacity at almost 30 locations (outside China) has
been closed due to repair costs as well as poor international market.

Coking Coal Prices: To produce coke economically, the market coke price needs
to be at least 1.8-2 times the hard coking coal price (approximate rule).

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Blast Furnace Coke Pricing
Ø Shown are the annual averages of
the prices researched each month
by “Resource-Net”. We report
“cfr” prices for Europe and India,
as well as Chinese prices.
Ø Following recovery in 2010-11,
market (cfr) prices were lower in
2012-13.
Ø Re-entry of Chinese coke
impacted market prices in 2013;
but prices were already on lower
trend compared to 2010-11.
Ø There remains over-capacity in
many world markets; coking coal
also in over-supply.

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Pricing for Coke Compared to

Other Commodities
Ø Prices for coke and coking coal
are contrasted to those for
energy products - such as
thermal coal and oil - and steel
over the past year.
Ø Coke and coking coal have
declined more than other
markets, as the chart indicates.
Both are down 15% from one
year ago.
Ø Alone among major
commodities, oil price has
remained at high level over past
year.

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 World Coke Production
Increase in Chinese
coke production as % of
world total from 2000.

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Chinese Blast Furnace Coke

Price & Exports

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Export Pricing from China
Ø We report prices for blast furnace,
nut and foundry coke from China
through regular dialogue with
industry participants.
Ø Blast furnace coke goes to
markets like Brazil and India.
Ø Main markets for foundry coke
have been other Asian economies
like Japan, South Korea and
Chinese Taipei.
Ø Nut coke is exported for
ferroalloys production to India,
South Africa and other countries.
Ø Of last year’s export of 4.7m
tonnes, around one-third went to
India.

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Leading World Coke Exporters

Ø Poland has been world’s leading
coke exporter since 2009; but China
may re-gain this position from 2014.
Ø China: due to cancellation of 40%
export tax from 01/2013, exports
increased four-fold last year;
replacing other countries’ coke
exports in Asia.
Ø Japan: exports in long-term decline.
Ø Poland: supplies other European
countries primarily; volumes will be
stable.
Ø Colombia: traditional markets in
Latin America, but also supplies
Europe and North America.
Ø CIS (Russia & Ukraine): important
suppliers to Europe and Middle East.
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 World Cross-Border Coke Trade
Ø By adding imports of all major
economies, we obtained the
figures for global coke trade
since 2001.
Ø After 2008, coke trade has been
lower due to a combination of
the “economic crisis” and
capacity additions.
Ø From 25-30m tonnes/year until
2008, volume has declined to
around 20m tonnes/year.
Ø Coke trade volume is unlikely
to return to level of before
2009.

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Market Outlook for Coke

Due to cancellation of export tax from start of 2013, China’s export
volumes increased significantly. Last year’s volume increased more
than four times to 4.7m tonnes. At start of 2014, exports running at
almost 9m tonnes/year (annualized); so China is likely to overtake
Poland as leading coke supplier.
Main interest in China is due to its large supply base (70% of world
production), meaning more possibility to find special grades of coke.
It is likely to remain primarily a supplier to other Asian countries.
World trade volume will remain below the pre-2009 levels of 30m tpy
due to capacity additions and slow economic growth around the
world. In last four years, coke trade has been centred around 20m
tpy.
Longer term, if closures of coke capacity for environmental and
economic reasons continues, market may be short of coke in future.

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