- Muted demand amid holiday lull, high inventory levels
- Bearish sentiment stems from environmental curbs, softer futures
Mysteel Global: As the Chinese New Year holiday over February 15-23 is only one week away, trading in China’s metallurgical coke market is expected to slow down amid a quieter downstream steel market and the weaker demand from mills.
On February 6, Mysteel assessed China’s quasi-first-grade met coke prices, for wet- and dry-quenching types respectively, at Yuan 1,426.7/tonne ($205.8/t) and Yuan 1,568.9/t including the 13% VAT, both flat from the previous session.
Amid a quietened downstream steel market, met coke trading is expected to slow down as well. According to market sources, last Friday marked the last workday before the holiday for most domestic steel traders, while those who remains in the market this week will also focus on inventory checks and receivables collection.
With steel trading already stuck in a stalemate, steelmakers are expected to further reduce their purchases of met coke input this week, especially since most mills had built up raw material stockpiles for their production during the holiday break, according to market analysts.
Apart from the holiday effect, environmental protection requirements this week may also disrupt operations at integrated mills, denting their demand for met coke. On February 8, six cities in North China’s Hebei province – a major steelmaking region of the country – issued new warnings of heavy air pollution.
In previous warnings, local blast-furnace (BF) mills were required to rein in operations to reduce emissions, directly limiting their consumption of met coke, Mysteel Global notes. Expiration dates on the new notices have yet to be announced.
According to Mysteel’s survey of 247 BF mills across the country, over January 30-February 5 their combined hot metal production averaged 2.29 million tonnes/day, up 0.3% on week and 0.1% on year.
In the derivatives market, sentiment continued to wane last Friday. The most-traded met coke contract for May delivery on the Dalian Commodity Exchange closed the daytime trading session at Yuan 1,698.5/t, down 2.6% from Thursday’s settlement price.
Mysteel also assessed lower met coke prices at China’s major ports the same day, as sentiment among traders were dampened by the softer futures prices. At Qingdao port in East China’s Shandong province, the price for first-grade met coke (ash 12.5%, sulfur 0.65%, CSR 65%, MT 7%) reached Yuan 1,570/t on an ex-stock basis with VAT, down Yuan 10/t from the previous day.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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