Total inventories of metallurgical coke stockpiled at the 230 Chinese independent coking plants that Mysteel regularly tracks decreased for the sixth consecutive week over 3-9 May, dropping by 21,600 tonnes (t) on week to 453,500 t. Survey respondents pointed out that steady procurement by steelmakers helped to reduce the coke plants’ inventories further.
Chinese steelmakers showed a steady demand for coke during the past week, a consequence of the uptick steel production, Mysteel Global noted.
For example, hot metal production among the 247 Chinese steelmakers Mysteel regularly tracks rose by another 38,300 t/day (d) on week during 3-9 May to an average of 2.35 million tonne (mnt)/d, leading the domestic mills’ demand for feed materials to also increase.
The firm buying interest from mills helped to sustain the margins of coke producers and spurred them to beef up their production this week, especially as their coke stocks underwent a further decline during the period.
Mysteel’s other survey conducted among a smaller sample of 30 merchant coke producers nationwide showed that as of 9 May, they were earning Yuan 84/t ($11.6/t) on met coke sales, slightly lower than their average profit of Yuan 91/t as of 5 May.
Reflecting the sustained demand for coke among steelmakers and the coking firms’ favourable margins, daily production of met coke among those sampled 230 coke makers checked by Mysteel leaped to 526,400 t/d during 2-8 May, up by a larger 33,100 t/d from a week earlier.
Chinese coke prices remained largely steady during the week, Mysteel Global noted. As of 9 May, China’s national composite coke price under Mysteel’s assessment showed only a minimal change at Yuan 2,097.9/t including the 13% VAT, up by a marginal Yuan 2.2/t from 6 May.
Against this background of generally stable prices, the coke firms’ proposal to their steelmaking customers for another Yuan 100-110/t price increase tabled on 7 May, as Mysteel Global reported, has met resistance from leading steel mills, a Shanghai-based analyst said.
Unlike the previous four instances where the mills quickly accepted the price hikes with little discussion, this time the steelmakers have initiated negotiations with the coke suppliers, arguing that the succession of coke-price hikes recently had elevated their production costs and dented their profit margins.
“The resistance exhibited by mills regarding the latest increase in coke prices has dampened the prospects of its success,” the Shanghai source said.
As of 9 May, about 52% of the same 247 steel mills Mysteel tracks were able to generate profits from selling their steel products, compared with 53% at end-April.
Note: This article has been written in accordance with an article exchange agreement between MySteel Global and BigMint.