- Chinese coke producers may raise production cuts to 50%, tightening supply and supporting prices
- Late-August blast-furnace restarts could boost coke procurement and strengthen price sentiment
Chinese metallurgical coke producers are taking multiple steps to bolster their pricing power ahead of talks with steelmakers, aiming for a fresh price hike in late August, Mysteel learned.
On August 12, Mysteel Coke Index (MCI) CDQ, which tracks China’s national dry-quenched quasi-first-grade met coke prices, remained stable from the last session at Yuan 1,838.7/tonne ($272.7/t), while the MCI CWQ for wet-quenched quasi-first-grade met coke also stood flat at Yuan 1,695/t.
Market chatter indicates that a meeting of major coke producers on Wednesday may have discussed deeper production cuts, potentially raising curtailments to 50% from the current 10-35% range in the near term. The move was reportedly driven by the notable rise in coking coal prices yesterday, which further increased producers’ cost pressures. Although the information has yet to be confirmed, such a development would imply a progressive improvement in the coke market’s supply-demand balance in the coming period.
Coke output reductions have indeed accelerated across key production hubs recently, pressured by widening losses throughout the sector. Concurrently, sources note that some coke producers have started holding back their met coke sales in an effort to tighten spot market supply.
The recent supply curbs are seen as a last-ditch effort to push through coke price increases, coming at a time when supportive factors are piling up: unabated coal price gains and upticks in blast furnace operations late this month.
Sources noted that several integrated steel mills plan to resume blast-furnace operations in late August, which could push the daily hot metal output of the 247 mills monitored by Mysteel back above the 2.4 million tonnes/day threshold. This recovery would in turn signal that mills are likely to step up coke procurement to match their restored production levels.
Certain steel mills exhibited moderately stronger interest in coke purchases on Wednesday, though overall demand has yet to mount a clear recovery. Meanwhile, met coke inventories at some production plants have begun to ease from previous highs, according to market sources.
Coke futures extended their upward trajectory yesterday, buoyed by a firmer performance in the coking coal complex. The most-active September coke contract on the Dalian Commodity Exchange closed Wednesday’s daytime trading at Yuan 1,906/t, logging a 1.11% gain from the prior day’s settlement price.
The domestic portside coke market extended the winning streak on Wednesday, with trading levels moving higher amid growing bullish sentiment among participants. Mysteel assessed wet-quenched quasi-first-grade coke (CSR 60%) and first-grade coke (CSR 65%) at Yuan 1,680/t and Yuan 1,780/t ex-stock Rizhao port, respectively, both gaining another Yuan 40/t from the last session and including VAT. The price of dry-quenched quasi-first-grade coke also rose Yuan 10/t to Yuan 1,880/t.
Note: This article has been published in accordance with a content exchange agreement between Mysteel Global and BigMint.
Leave a Reply