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China’s coke makers skip ‘weekly’ coke price hikes

Posted on 09 February 2021

After raising their prices for metallurgical coke on no fewer than 15 occasions since last summer by a total of Yuan 1,000/tonne ($154.8/t), China’s independent coke makers last week took a pause from tabling further increases. As of Friday afternoon, no coke plants had announced plans to raise coke prices for this week, a lull that was unusual given the makers’ practice over the past few months, Mysteel Global noted.

Chinese domestic coke prices had begun to increase since mid-August 2020, and from early December last year, the frequency of the rises had accelerated to once every week. As of February 5, Mysteel’s composite coke price was Yuan 2,710.9/t and including the 13% VAT, a high since September 2008, though the price had remained generally unchanged all last week.

The fall in steel demand in the leadup to the Chinese New Year break (February 11-17), together with lower steel prices, had resulted in the steelmakers’ margins on finished steel falling significantly below those of coke, said a Shanghai-based analyst. “Signs of easing demand have emerged, as quite a few steel plants have scheduled blast furnace maintenance, which will reduce coke consumption,” he explained.

As of February 4, the average coke margin of the 30 Chinese independent coking plants sampled by Mysteel had reached Yuan 1,002/t, rising by another Yuan 18/t on week to a record high since Mysteel commenced the survey on January 5 2017. However, Mysteel’s assessed rebar margin was minus Yuan 190.2/t the same day.

“But it’s still too early to say that coke prices are about to start to decline,” the analyst said, explaining that the market fundamental of coke supply being tight has not changed.

Another market watcher in Shanghai agreed, noting that although the interest of steel mills in coke procurement has cooled with the Chinese New Year approaching, some makers still have replenishment demand as their coke stocks were low.

As of February 4, the blast furnace capacity utilization rate among the 247 Chinese steel mills sampled by Mysteel had edged up 0.4 percentage point on week to 90.9%. The same day, total coke stocks at a smaller sample of 110 Chinese steelmakers rose 2.1% on week to 4.3 million tonnes, which was still 3% lower on month or 8.3% lower on year.

Coke stocks at the 230 Chinese independent coking plants, however, dipped by another 0.5% on week to 386,800 tonnes as of February 4, refreshing the low since Mysteel commenced the survey in late December 2017.

Source : Mysteel Global