China is unlikely to remove the 40% export duty on metallurgical coke, most participants at the Coaltrans conference in Hong Kong said Wednesday.
"I think it is very unlikely to happen," said Marta Jarno, director of Market Analysis at Polski Koks. "I think the Chinese government will find other ways to limit coke exports."
Jacek Rozek, sales and marketing Director of Polish coke exporter PHU Weglohut SJ, agreed. "If China removes export duties, I'm sure there will be something new to protect the market," he said.
They were echoing what participants at Coaltrans Australia said last month. China is unlikely to lift export barriers on metallurgical coke at the end of 2012 as has been widely anticipated by the industry, executives from Chinese and Indian independent coke producers said on the sidelines of the conference.
The issue was raised at the Hong Kong conference on Tuesday by Ajay Mishra, executive director for coke at Noble Resources, who said there was a 50-50 chance that the Asian economic giant would remove the export tariffs.
Sun Xuefeng from Sinosteel Raw Materials, however, saw the cut in export duty as a possibility. "The government may not only decrease the [export] rates, but will cancel customs duty completely," Sun said Wednesday, adding that this would be implemented as a long-term policy, rebutting the view that even if the government does cut tariff, it would a short-term measure.
MIXED OPINIONS ON METALLURGICAL COKE INDEX PRICING
Market participants had mixed views on whether the coke industry would follow in the footsteps of iron ore and coking coal in adopting index-linked pricing.
Rozek was skeptical as to whether this could work since "it is difficult to prepare an index that can take into account different qualities of coke." .
Neil Bristow, Managing Director of H&W Worldwide Consulting, however, disagreed, saying: "I am surprised why coke index-linked price is not popular. It is much easier to calculate, more linear, less complex than coking coal." He did, however, raise the concern as to whether there would be enough volume for such an index to work, whether the market was "big enough."
Poland's Polski Koks does use an index, though it is not a coke one. "The price of coke is calculated using a formula involving hard coking coal prices," Jarno explained.
