- Coke makers call for output curbs after 1st round of price cuts squeeze margins
- Steel mills continue reducing production, met coke output curbs unlikely to halt slide
China’s metallurgical coke market is expected to extend its downtrend in the near term, even as coke producers attempt to push back with production cuts. Sources indicate that persistent pressure from steelmakers seeking to reduce input costs will continue to dictate market direction for met coke.
The Mysteel Coke Index (MCI) CDQ, which tracks China’s national dry-quenched quasi-first-grade met coke prices, remained flat from the last session at RMB 1,946.4/tonne (t) ($287.5/t) on Thursday, while the MCI CWQ for wet-quenched quasi-first-grade met coke also stood unchanged at RMB 1,794/t, both including VAT.
Sources said that during a meeting on Thursday afternoon, several leading coke producers called for broader near-term output reductions to mount a strong defence against any further price cuts their steelmaker customers might initiate.
The first round of met coke price cuts, effective nationwide on Wednesday, has pushed most coke producers to the edge of break-even, while operators of top-charged ovens are suffering deeper losses — financial strain that has stiffened their resolve to resist any further downside risk.
Analysts, however, view this boycott — a familiar tactic more rhetorical than substantive — as unlikely to materialise into real action, offering scant help in reversing the market’s downward trajectory. Market players maintain their outlook for another one or two rounds of coke price cuts going forward.
Tepid demand from steelmakers — a primary drag on the coke market — has persisted, as mills continue slashing production amid lacklustre steel consumption and weakening steel prices. Mysteel’s survey on the 247 blast-furnace steel mills showed that their daily hot metal output over 17-23 July decreased by another 0.63% on week to average 2.38 million tonnes (mnt)/day, dipping for the third straight week.
Finished steel inventories across the country continue piling up this week, demonstrating loosened steel fundamentals. Sources said that downstream users still purchase steel products on a need-to basis although summer heat and rainfalls have eased slightly, presenting reduced disruptions to outdoor construction work.
Domestic ferrous futures rallied across the board on Thursday, as sentiment recovered alongside global crude oil surges as escalated Middle East tensions hammered shipping through both the Strait of Hormuz and Bab el-Mandeb Strait. Adding to the upside, supply worries over Shanxi coking coal intensified, with several local mines having ceased operations or planning imminent stoppages due to the expiration of their mining licenses.
On the Dalian Commodity Exchange, the most-traded September coke contract closed Thursday’s daytime trading session 1.07% higher at RMB 1,847/t.
The portside met coke market remained flat on Thursday, with participants waiting on the sidelines, watching further market signals. Mysteel assessed wet-quenched quasi-first-grade coke (CSR 60%) and first-grade coke (CSR 65%) at RMB 1,670/t and RMB 1,770/t ex-stock Rizhao port, respectively, both stable from the last session and including VAT. The price of dry-quenched quasi-first-grade coke also stood still at RMB 1,870/t.
Note: This article has been published in accordance with a content exchange agreement between Mysteel Global and BigMint.
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