- Tepid steel demand, weak profit margins continue
- Recovery in construction activity slower than expected
Mysteel Global: China’s metallurgical coke market witnessed another price cut of RMB 50-55/tonne (t) ($6.9-7.6/t) materialise on 25 February amid pressures from two leading Chinese steelmakers, marking the tenth round of coke price cuts since October last year, according to sources.
Following the adjustment, prevailing offers for wet-quenching quasi-first-grade met coke in North China’s Shanxi declined to RMB 1,180-1,300/t on Tuesday and those for dry-quenching quasi-first-grade coke in East China’s Shandong ranged within RMB 1,550-1,620/t, exw with VAT included, Mysteel learnt.
On Tuesday, China’s national composite coke price under Mysteel’s assessment declined by RMB 43.7/t d-o-d to RMB 1,362.6/t, including 13% VAT.
Considering the still lukewarm steel demand among end-users and weak margins on sales, Chinese steelmakers showed limited interest in ramping up coke purchases and kept their stocks at reasonable levels to avoid risks.
Contributing to the lacklustre steel demand was mainly the slower-than-usual resumption of construction projects in China. For example, around 6,455 Chinese building contractors had restarted operations as of 20 February, representing only 47.7% of the total 13,532 contractors under Mysteel’s survey. The figure was also notably lower than the 8,512 contractors that had resumed work during the same time last year, according to Mysteel’s survey results.
The ongoing weakness in downstream demand, combined with the fact that mills still hold high coke inventories, has led to a low willingness to purchase additional coke. Some market participants have maintained a bearish outlook for the near term.
On Tuesday, met coke prices at major Chinese ports also dropped RMB 50-55/t. Mysteel’s assessment of first-grade met coke (ash 12.5%, sulphur 0.65%, CSR 62%, MT 7%) prices in Qingdao Port, Shandong province, declined another RMB 30/t from Monday to RMB 1,540/t as of Tuesday, on ex-stock basis, including 13% VAT.
At Rizhao and Qingdao ports in Shandong province, coke stocks totalled 1.32 million tonnes (mnt) as of Wednesday morning, up by 20,000 t d-o-d and also up by the same 20,000 t w-o-w, Mysteel’s tracking data show.
Indonesian coke prices also lost more ground. By Wednesday morning, Mysteel’s assessment for prices of Indonesian quasi-first-grade met coke (ash 12.8%, sulphur 0.7%, CSR 62%, VM 1.6%, MT 5%) declined by $3/t d-o-d to $225/t, while those of first-grade met coke (ash 12.5%, sulphur 0.6%, CSR 65%, VM 1.3%, MT 5%) slipped by the same $3/t d-o-d to $235/t, both on FOB basis at Bahodopi Port in the Central Sulawesi province of Indonesia.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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