China: Met coke prices stay strong amid outlook of tighter supply

• Coke prices remain at six-month high
• Brisk hot metal output to boost coke tags

Mysteel Global: Prices of Chinese metallurgical coke remained firm on 15 August. Market analysts expected prices to stay strong in the near term, supported by supply contraction of this steelmaking ingredient in some key producing hubs of East China, according to market sources.

The national composite met coke price assessed by Mysteel last Friday remained flat from the previous session at a six-month high of RMB 1,408.4/tonne (t) ($196.1/t), including 13% VAT.

As of 15 August, most coke producers in East China’s Shandong province confirmed to Mysteel that they would follow local authorities’ previous instructions, to cut production by 30%-50% of their full capacity during 16 August-3 September.

While Shandong province stands as an important coke producing region of the country, it was expected that domestic supplies would tighten in the latter half of August in tandem with production curbs in Shandong, a Shanxi-based analyst said.

Before this move starts, the average capacity utilisation rate at coke plants that Mysteel surveys in East China had already declined to 79.4% during 7-13 August, lower by 1.2 percentage points from a week ago and hitting the lowest level since late March.

Meanwhile, brisk production of hot metal among steelmakers may also help to strengthen met coke prices. During 8-15 August, the output of hot metal among the 247 blast furnace mills under Mysteel’s tracking managed to tilt up again, up by 3,400 t/day w-o-w to average 2.41 million tonnes (mnt)/d. This was higher by a large 5.2% from the previous year, reflecting steelmakers’ firm demand for raw materials.

The positive outlook therefore lifted sentiment in the futures market last Friday, with the most-traded met coke contract for next January delivery on the Dalian Commodity Exchange climbing up following declines over the prior two days. The price settled at RMB 1,729.5/t by the end of the daytime trading session, edging up by 0.5% from Thursday’s settlement price.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.