Posted on 31 Mar 2021
China’s coke price has been on a downtrend since late February, and the past seven rounds of price cuts had been at the pace of Yuan 100/t each time in barely a month, much faster than the total increase of Yuan 1,000/t in 15 rounds prior six months, and as of March 29, Mysteel’s national composite coke price already returned to a low since December 9 2020, down another Yuan 89.8/t on week to Yuan 2,154.3/t including the 13% VAT.
Among the steel mills requesting for the eighth coke price cut is Shanxi Jincheng Steel Holding Group, asking for a Yuan 100/t cut from its coke suppliers effective March 30 due to its rather high coke stocks while lacklustre steel sales, according to its notice circulated in the market on Monday.
With the latest adjustment, Shanxi Jincheng in North China’s Shanxi, will pay Yuan 1,850/t EXW including the 13% VAT for wet-quenched coke with 8% moisture, 3% ash, and 0.7% sulphur at maximum.
No notice from the other major steel mills in North and East China has been circulated in the market as of Tuesday morning, though some market sources believe that “it is just a matter of time”.
China’s coke market has shifted to “buyers’ market”, as domestic coke supply has changed from tight to sufficient, a Shanghai-based analyst pointed out, which a second Shanghai analyst agreed, adding, “coke is now with the weakest fundamentals among all the (steelmaking) raw materials.”
“As Chinese steel plants’ cost from coke has fallen so much, the pressure to curtail iron ore prices may ease,” he added.
In the near term, China’s coke price may face another one or two rounds of cuts by a total of Yuan 200/t before reaching interim stability after the eighth cut, the first analyst predicted. “I do not see the coke price to rebound afterwards, but more likely, both the steel mills and coke plants will stay chill for a while before new price adjustments are on their agendas,” he said.
Nevertheless, “recent tumbles in China’s coke prices have not dampened the country’s coke production much, as the coking margin has remained healthy,” said an industrial source in Shanxi.
Mysteel’s survey on coke profitability among China’s 30 independent coking plants did show that their average margin at Yuan 465/t as of March 25 despite the on-week drop by Yuan 170/t, which was much higher than the Yuan 260/t on average for 2020.
Last week, Chinese steel mills appeared rather conservative in procuring coke and very few seemed interested in building up stock at their works, though several coke traders have shown growing interest in speculative buying, he added.
By March 25, the capacity utilization rate of the operative coke ovens at China’s 230 independent coking plants averaged 89.5%, or just 0.8 percentage point lower on week due to the curbing on coking capacities in North China’s Shanxi on local poor air quality, as reported.
As of March 25, coke stocks at China’s 230 coking plants hit a near 11-month high of 1.56 million tonnes, and the volume at China’s 110 totalled 4.93 million tonnes, approaching an eight-month high, and this could last the mills for 15.8 days, a high since April 30 last year, according to Mysteel’s data.
Source:Mysteel Global
