The China Coking Association Market Committee conducted an online meeting to analyse the market. The meeting was attended by major coking enterprises from Shanxi, Hebei, Inner Mongolia, Henan, Shandong, Jiangsu, Shaanxi, Jiangxi, Anhui, Guizhou, and Yunnan, Ningxia, and other regions.
Keeping in view the dull market conditions, the participants decided to halt coke sales until their profits were recovered. This comes after the coke producers had called for stringent output cuts beyond 50% in the previous meeting held on 18 July, 2022.
The decision was taken as no major improvement was seen in the market despite the production cut.
Currently, steel mills are also curtailing production. At the same time, they have suppressed coke prices by reducing normal purchases and are relying on inventories instead. At present, coke inventory of steel mills and other related entities has dropped to the lowest level since 2015.
As a result, most of the companies suffered huge losses and have identified supply cut as a swift measure to fix the coke prices.
It is important to note that the average cost of coking coal has dropped by just a little over RMB 300/t, whereas the cost of coke has dropped by RMB 920/t.
Based upon the meeting discussion, the participants have agreed to:
- Reduce operating rate to 50% before 24 July and suspend sale until profits are recovered
- Maintain minimum purchase of coking coal till drop in coking coal prices matches the corresponding drop in coke prices
- Adhere to the principle of advance collection and avoid major risks.
The participating companies highlighted that these measures primarily led by collective cooperation in production restrictions would avert a large-scale survival crisis in the industry.
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