Posted on 03 Dec 2020
Major independent coke producers in North and East China, the country’s top coking and steelmaking bases, have announced their intention to raise their selling prices of coke by Yuan 50/tonne ($7.6/t) effective from December 1. If successful, the increase would be the eighth the coke makers will have prised from steelmakers since mid-August, Mysteel Global notes. Now, as in earlier campaigns, the coke producers are citing strong demand from their steelmaking customers and tight supplies, exacerbated by campaigns in some provinces to remove coking capacity.
Announcing its decision on Monday, a large-sized independent coking plant in North China’s Hebei, for example, noted that the Yuan 50/t hike in its coke prices would be for sales from December 1. With the adjustment, the plant’s dry quenching coke with 12.5% ash and 0.65% at the maximum and at least 60% CSR will be priced at Yuan 2,420/t ex-works and including the 13% VAT.
As of December 1, Mysteel’s national composite coke price had increased by Yuan 7.6/t on week to Yuan 2,114.2/t including the 13% VAT, a new high since January 4, 2019.
Key steelmakers in the same region have not released news of any decision regarding their coke procurement prices yet, but market participants mainly hold a positive view on agreements for higher coke prices, Mysteel Global understands.
Although coke makers are keeping their operations at a high level, coke stocks at their plants have continued to decline, observed a market watcher in North China’s Shanxi, the country’s largest coking base. “Some local plants (in Shanxi) have had to control the volumes of coke they’re delivering to customers to ensure they can maintain steady supplies,” he said.
As reported, total coke stocks at the 230 Chinese independent coking plants surveyed weekly by Mysteel reached a two-year low of 603,500 tonnes on November 26. The same day, Mysteel’s survey on the 247 steel plants nationwide showed that the average blast furnace capacity utilization rate was still at a high of 92.5%. The rate has stayed above 90% since May, according to Mysteel’s data.
Moreover, progress being made across China to eliminate outdated coking capacity will keep supporting domestic coke prices, a Shanghai-based futures analyst argued. “If the de-capacity tasks are strictly implemented, further increases in coke prices are possible,” he said.
China has been actively scrapping inefficient coking capacity as part of efforts to reduce air pollution and to optimize the sector’s industrial structure. This year is the final year that provincial governments have if they are to achieve the central government’s mandated “Blue Sky Safeguard” whose results are to be reviewed by Beijing.
According to Mysteel’s survey, over this year’s January-November period, China eliminated 37.8 million tonnes/year of inefficient coking capacity, while 31.1 million t/y of new capacity was commissioned, for a net 6.7 million t/y cut. From the end of November till end-December, another 25 million t/y of inefficient capacity is scheduled to be permanently removed while only 10.5 million t/y of new capacity is to be started, Mysteel’s data showed.
Written by Sean Xie, xiepy@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Source:Mysteel Global
