- Weak steel demand and cautious buying triggered a third coke price cut of Yuan 50-55/t
- Higher hot-metal output and firmer futures may moderate further price declines
China’s third round of metallurgical coke price cuts officially took effect nationwide on August 7, reflecting the overwhelming weight of sluggish downstream demand despite emerging support late last week. The domestic coke market is likely to remain weak in the short run, although downside pressures are expected to gradually subside.
Mysteel Coke Index (MCI) CDQ, which tracks China’s national dry-quenched quasi-first-grade met coke prices, dropped Yuan 53.9/tonne ($8/t) from the last session to Yuan 1,838.7/t last Friday, while the MCI CWQ for wet-quenched quasi-first-grade met coke also lost Yuan 44.1/t to Yuan 1,696.3/t.
On Friday, two leading Chinese steel groups — Hebei Iron and Steel Group (HBIS) and Rizhao Steel Holding Group — decided to lower their purchasing prices by Yuan 50/t and Yuan 55/t, respectively, for wet- and dry-quenched met coke products starting the same day, pushing the third price reduction originally proposed by some northern mills last Wednesday to materialize across the country.
Prices set by the HBIS came in at Yuan 1,880/t for stamp-charged wet-quenched first-grade met coke and Yuan 2,270/t for top-charged dry-quenched first-grade cargoes, on a DDP basis, inclusive of VAT, Mysteel learned from sources.
Rizhao Steel’s prices were also revised lower to Yuan 1,695/t and Yuan 1,970/t for wet-quenched and dry-quenched quasi-first-grade shipments, while second-grade product was pegged at Yuan 1,635/t, all for stamp-charged type, DDP with VAT.
Coke producers in Shanxi also pared their offering levels by the same margin on Friday, with Lvliang dry-quenched quasi-first-grade and first-grade cargoes quoted Yuan 55/t lower at Yuan 1,795-1,850/t and Yuan 1,905-1,915/t, respectively, EXW with VAT.
In contrast, domestic coke futures continued to gain traction on the final trading day of last week, with the most-traded September contract closing Friday’s daytime trading session 2.83% higher at Yuan 1,868.5/t, extending gains for four straight sessions.
While this renewed bullishness is unlikely to spark an immediate rebound in spot prices from recent declines, sources expect that it may slow the pace of the market downturn in the near term.
They note that although recent increases in hot metal production have slightly boosted mills’ underlying demand for coke, overall purchases remain cautious, with most mills procuring only small volumes as they primarily draw down existing stockpiles. Meanwhile, coke traders have largely stayed on the sidelines, assessing the sustainability of the recent futures uptick and their risks of taking positions.
“The actual execution of coke production reductions and whether hot metal output could rise further in mid- to late-August will be two key indicators for the market direction,” a North China-based trader noted.
The portside met coke market moved higher last Friday, as traders lifted offers amid persistent rises in the futures market. Mysteel assessed wet-quenched quasi-first-grade coke (CSR 60%) and first-grade coke (CSR 65%) at Yuan 1,590/t and Yuan 1,690/t ex-stock Rizhao port, respectively, both up Yuan 20/t from the last session and including VAT. The price of dry-quenched quasi-first-grade coke even jumped by 30/t to Yuan 1,850/t.
Note: This article has been published in accordance with a content exchange agreement between Mysteel Global and BigMint.
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