Second price cut weighs on China’s met coke market

• Coke prices face renewed cuts as steelmaker losses widen
• Coal supply tightening may offer some support to prices

Mysteel Global: China’s metallurgical coke market stayed under pressure on December 10, as some steelmakers announced a new RMB 50-55/tonne ($7-7.7/t) cut in their purchasing prices for all coke products, effective December 12, according to market sources.

This marked steelmakers’ second attempt for lower feed coke prices following a similar RMB 50-55/t reduction that they had pressured coke plants to accept early this month, Mytseel Global notes.

The persistent losses had mainly prompted domestic steelmakers to claw back some margins from their upstream suppliers, as reported. According to Mysteel’s survey of 10 integrated mills in Tangshan city, North China’s Hebei province, their average loss on billet sales had widened again to RMB 125/t as of December 10, up by a large RMB 44/t after recent drops in domestic steel prices.

Market analysts note that the new price cut should materialize as scheduled, as coke plants have little leverage to bargain with steel mills.

However, many analysts remain cautious about predicting further price cuts in the future, citing possible support from the cost front.

As domestic coking coal miners are gradually slowing production after meeting their annual output targets, some market players expect tighter domestic availability to offer some support to coal prices in the near term, thus cushioning downside pressures for met coke prices, according to market sources.

On Wednesday, Mysteel’s assessment of China’s quasi-first-grade met coke prices, for wet-quenching and dry-quenching types respectively, stayed unchanged from the previous session at RMB 1,532.3/t and RMB 1,674.5/t including the 13% VAT.

In the derivatives market, met coke futures prices stabilized after sharp declines recorded over the previous days. On the Dalian Commodity Exchange, the most-traded contract for next January delivery rebounded by a small 0.4% from Tuesday’s settlement price to end Wednesday’s daytime trading session at RMB 1,527/t.

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