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Colombia's met coke outlook uncertain after strong 2018



By Argus

Petroleumworld 02 25 2019

Colombia's coking coal and metallurgical coke production hit a record high in 2018, but the growth outlook for 2019 is uncertain, with domestic coke plants at capacity and high Chinese stocks potentially dampening future price growth, according to an executive at coal federation Fenalcarbon.

Colombia produced around 8mn t of coking coal in 2018, up by 33.8pc from 5.98mn t in 2017, according to Fenalcarbon's estimates. Official government data for December is yet to be released and is expected by the end of February.

Of last year's estimated total, 6.5mn t was produced in the central provinces of Cundinamarca, Boyaca and Santander, and the remainder was produced in the eastern province of Norte de Santander.

More than half of last year's coking coal output was put towards domestic met coke production, which hit a record high of 3.3mn t in 2018, up from 2.8mn t in 2017.

"We had a spectacular year last year. Prices were high and companies worked at full capacity. This year is just beginning, but there is uncertainty because of high stockpiles of met coke in China, which could impact prices," the Fenalcarbon executive said.

Chinese met coke prices surged last year, with the Argus fob north China index for 62 CSR material peaking at $390.85/t in early November and never falling below $307.40/t. Similarly, the fob north China assessment for 65 CSR met coke peaked at $400.50/t in November and went no lower than $315/t last year.

Argus ' daily fob north China met coke assessments are currently at $336.15/t for 62 CSR and $347/t for 65 CSR.

Colombian met coke prices at lower levels than Chinese material, but typically tracks China indexes fairly closely with a typical discount of 5-7pc, albeit with variations depending on quality, according to market participants.

Last year's high seaborne met coke prices encouraged some Colombian companies to boost output and restart some idled coke batteries. Coquecol has restarted a 120,000 t/yr capacity battery in Boyaca that it idled three years ago amid weak price conditions. Coquecoal also restarted two other facilities last year, in Castilla and Cucunubá, each bringing an additional 150,000 t/yr of met coke capacity back on line.

In all, Colombia's met coke production capacity rose to 2.8mn t/yr in 2018 from 2.5mn t/yr at the beginning of 2017, Fenalcarbon's president Juan Manuel Sanchez said previously.

Market participants confirm that seaborne demand for Colombian met coke has increased in the past two years, bolstered by a combination of steel production ramp ups in several key regions and a perception that Colombian met coke has become more reliable in terms of quality and delivery.

But potential for further met coke production growth in 2019 may now be constrained by capacity limitations, as most Colombian coke plants are operating at full capacity, the Fenalcarbon executive noted. For example, Milpa Colombia's largest met coke exporter has its three coke batteries working at full capacity, after restarting its Socha battery in 2017.

Colombia's coking coal producers have not outlined any major plans for mine expansions or new mine development, indicating that even if met coke producers had scope to boost output, they may struggle to secure enough feedstock from local sources, the executive said.




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