The client, a major merchant coke producer in China, had plans to expand coke capacity and raise its seaborne exports. The client asked CRU to assist in identifying appropriate export markets, including the targeting of the most attractive steel mill customers and examining the competitive threat from other merchant coke producers in each major seaborne market.
Methodology
This study was built on CRU’s vast database and experience along the whole global steel and raw materials supply chain. We were able to provide our client with a short list of steel mill target profiles, including these mills’ coke production facilities, costs of production and specialist knowledge on these mills’ drivers of coke purchasing requirements. Our unique blend of knowledge and data across the whole value chain enabled us to provide strategic advice to our client for its coke export strategy.
In this study, firstly CRU examined trends in international coke markets, including supply, demand and prices to identify the most attractive growth markets, including non-steel related markets. Secondly, we examined the competitive position and margins of the client in these international markets, based on delivered costs and price forecasts. Thirdly, using CRU’s steel mill database and primary research we narrowed down the universe of potential steel mills to a short list with the best opportunities for merchant coke purchases around the globe, including detailed profiles of all of target mills with a detailed analysis and evaluation of their respective coke ovens. Finally, we considered the competitive position of our client’s exports against all major merchant coke exporters in the major export markets identified.
To reach the conclusion, using the information that we collected and data that we modelled, we conducted “portfolio analysis” which involved a two-by-two matrix illustrated below. This enabled us to filter the “universe of potential options” based on selection criteria developed in collaboration with the client’s requirements. Portfolio analysis showed the trade-off between market attractiveness and competitiveness at target steel mills to identify “high” and “medium” priority targets for export sales. In the final analysis we identified five target steel mills that presented the best opportunities for the client’s coke exports.
In the filter process, we worked closely with the client to confirm the criteria for conducting profiles of steel mills. We completed detailed profiles of over 20 target steel mills to help the client obtain knowledge on potential merchant coke targets and any changes forecast, which directly helped the client with their strategies for coke export sales.
Outcome
The client obtained a better understanding of the global coke market, particularly, the seaborne market by country over a forecast period. In addition, the client was helped to focus on several attractive target steel mill customers and was able to identify the competitiveness of their exports against competitors. This client is now successful in obtaining greater market share in the seaborne merchant coke market.
