Indonesian cokeries to maintain lower output amid India’s rejection of pre-booked cargoes

Indonesian coke makers will likely maintain their lower production rates following India's Feb. 6 rejection of a major buyer's ask for concession on their January-March laycan cargoes, concluded prior to the implementation of the country's quantitative restriction quotas.

India's Directorate General of Foreign Trade rejected the petitions made by JSW Steel and its subsidiary Amba River Coke, to import 340,000 mt of Indonesian low ash metallurgical coke, despite having their respective letters of credit issued prior to Dec. 26, 2024, when a country-wise import quota on met coke was announced for January-June 2025.

The DGFT's rejection was due in part to its objective to remedy the domestic market from the surge of low ash met coke imports. It added that the applicant had also ordered for the cargo to sail, even after the quotas were already in force.

The rejection was seen as a setback among coke makers in Indonesia, as they were hoping that production for January-March could continue for the already committed tonnage.

"They've committed their sales of coke, and they've then also committed to purchase the raw materials to make that coke," a regional trader said. "What's to happen next? Reselling of the coke? Or renegotiating the sales entirely? And then what about the raw material?"

In light of the quota notice Dec. 26 and poor demand for seaborne coke regionally, Indonesian coke makers were forced to reduce their coke output from about 90% in December, to 80-85% in January, and to 70% for February, sources said.

"We have already cut our production for February, coke makers here are controlling it at about 70%. This would likely continue for March and April, and if we are unable to find alternative buyers, perhaps longer," an Indonesia-based cokery said.

A second Indonesia-based cokery also said their production was down to 70% in February from 80%-90% in January.

Some sources pointed to the possibility of Indonesian production levels falling below 70% to 50%-60%, on the back of how exposed their sales portfolios were to India.

"We hear one of the cokeries had more than 40% of their sales portfolios to India, and if they lose that all ... what will happen to production levels then?" a regional trader said.

Meanwhile, India-based sources said the quotas were giving domestic cokeries "breathing space" amid poor margins in 2024 from the influx of competitive import options.

"Many [domestic cokeries] have been operating below 30%-40% capacities for the most part of the second half of 2024. Many merchant cokeries also went out of business," an Indian trader said. "They have started receiving a lot more domestic inquiries now, so they are likely going to ramp up towards March or April, when they can finally get their coal inputs."

India imported around 2.2 million mt of Indonesian met coke in January-November 2024, according to the latest data from S&P Global Market Intelligence's Global Trade Analytics Suite.

Platts, part of Energy, assessed CSR 65/63 met coke prices on a CFR India basis at $268/mt Feb. 7, the lowest in nearly four and a half years. CFR India prices have dropped nearly 3% since the announcement of the imposition of met coke quotas and around 28% year over year.

Meanwhile, Platts assessed CSR 65/63 met coke prices on an FOB Indonesia basis at $241/mt Feb. 7, lower by around 5% since FOB Indonesia price assessments began on Jan. 2, 2025.

The order also puts in doubt the possible approval of other petitions by Indian mills and trading firms to bring in prebooked met coke cargoes prior to Dec. 26, 2024. Other domestic mills who were also planning to file a petition in court may hold back now.

However, industry sources said the DGFT order will be further discussed on Feb. 13 in the Delhi High Court, along with the applications of at least two other petitioners.

Meanwhile, end-users who were allocated country-wise quotas were heard to be weighing offers of mainly Chinese, Indonesian and Colombian coke.

A major Indian steelmaker had also floated an inquiry in January for domestic coke of around 500,000 mt for February-July, while other mills were also expected to fulfill their requirements from domestic supplies.

Domestic coke prices for CSR 65% met coke were heard around $400/mt ex-stock in east India this week.