Posted on 04 Jun 2021
The one-week stalemate over coke pricing between China’s steelmakers and the country’s merchant coke producers has come to an end – maybe. On June 1, leading steel mills in North and East China – mills usually recognised as the final decision makers regarding coke prices in their regions – announced they were cutting Yuan 120/tonne ($18.8/t) from their coke procurement prices with immediate effect.
After the adjustment, from Tuesday one major steelmaker based in North China’s Hebei, for example, said it is paying Yuan 2,920/t on delivery and including the 13% VAT for the first-grade coke with the maximum of 12.5% ash, 0.65% sulphur and at least 65% CSR, according to its statement circulating in the market.
Before the decrease, China’s steelmakers had accepted no fewer than eight consecutive increases in coke prices, pushed through by the merchant makers since mid-April, for an increment of Yuan 840-960/t in total, as reported.
However, not all the company’s coke suppliers have apparently accepted the adjustment. Also on Tuesday, a coke plant in North China’s Shanxi replied to the Hebei-based steelmaker that it had decided to reject the steelmaker’s Yuan 120/t cut, according to its counter-statement circulating in the market.
“Based on the condition that supplies of top-charged first-grade coke are tight and that our coking coal prices have stayed high, we don’t think the (market) fundamentals can support any decrease in coke prices,” the company noted.
“The steelmakers’ decisions to cut coke prices were mainly made in response to the tumble of steel prices recently,” said a Shanghai-based analyst, adding that the steelmakers’ raw materials demand, however, remains buoyant.
For example, Mysteel’s average price for HRB400E 20mm dia rebar had plummeted by a total of Yuan 1,331/t over May 13-27, before rebounding (albeit slightly) by Yuan 228/t to Yuan 5,245/t including the 13% VAT on June 1.
For now, the steelmakers may continue to pare back their coke buying prices to lower their costs, the Shanghai-based analyst anticipated. But he warned that the space for any further decline is limited – given the robustness of steel production now – and any cut would not be sufficient to offset the total rise since April.
On Tuesday, Mysteel’s national composite coke price had ceased its sustained climb from mid-February, softening by Yuan 45.2/t on week to Yuan 2,750/t including the 13% VAT.
Source:Mysteel Global
