Coal, Coke to Rise to Record on Chinese Demand, Analysts Say

Chinese demand for metallurgical coal and coke will drive a record-setting price rally for the raw materials used to make steel, consultants and analysts say.

Coke, used in blast furnaces to make pig iron, may rise to $650 a metric ton on a free-on-board basis from China, the world’s biggest shipper of the raw material, said Luiz Sarcinelli, director of Rio de Janeiro-based coal consulting company Sage Consultoria Tecnica Ltda. The price hit a record $580 a ton in April.
China reduced exports this year because of bad weather and to meet rising domestic demand as steel output climbs. The Asian nation also imported more coking coal from Australia, the world’s biggest shipper of the coal.

“Current prices are becoming unworkable for steelmakers,” Andrew Jones, a coal market analyst with Belgian research organization Resource-Net, said today at a transportation and coal conference in Rio. “Steelmakers may introduce production cuts if coke prices, which are set monthly, continue to rise.”

Bloomberg