NewChinese metal-making coke exports likely to surge in Indonesia

Indonesia’s ban on exports of unprocessed metal ores will boost Chinese shipments of metallurgical coke by as much as 2 million tonnes a year to smelters being built in the Southeast Asian nation.

In particular, China will supply coke to its firms constructing plants in Indonesia to make nickel pig iron, a substitute for higher-grade refined nickel in stainless steel.

The increased shipments underline how Jakarta’s drive to transform Southeast Asia’s biggest economy into a producer of finished goods, rather than simply a supplier of raw materials, is changing the flow of commodities in the region.

A surge by as much as 2 million tonnes annually as new smelters come online in the next few years, according to Reuters calculations, would dwarf last year’s 47,000 tonnes.

That growth would provide fresh impetus to China’s overall coke exports, which customs data showed tripled to around 4.67 million tonnes in 2013 after Beijing around a year ago scrapped a 40 per cent tax and quota system on shipments of the material.

"The amount of coke going to Indonesia will rise a lot and domestic coke prices will certainly climb," said a manager at a Chinese smelter of nickel pig iron, who declined to be named or name her company.

Analysts though said that any rise in Chinese prices would probably be mild due to a supply surplus in the country. The smelter manager added that her firm would complete a nickel pig iron plant with blast furnaces in Indonesia in the fourth quarter this year and would start exporting coke to the unit in the second half due to low Chinese prices.