- Met coke makers record losses post 2nd round of price cuts
- Leading coke makers plan to cut output by 30% to stabilise prices
After a brief rebound, Mysteel’s coking coal price benchmark for China fell again on 30 July, weighed down by lingering demand concerns amid mounting financial pressures on end-users.
On Thursday, the Mysteel Coking Coal Index (MCCI), which tracks coking coal prices nationwide in China, stood at RMB 1,686.5/tonne (t) ($249.9/t) including the 13% VAT, down RMB 0.6/t on day after a RMB 2.4/t rally recorded on Wednesday.
Coking coal trading slowed yesterday, pressuring prices. Mysteel data indicated the online auction failure rate rose to 12.5% of total offered tonnage on Thursday, versus 9.6% and 4.9% on Tuesday and Wednesday, respectively. Of the 56,000 t on offer, 49,000 t were transacted.
“Worsening profitability among coking plants prompted them to remain cautious on raw material purchases,” a market analyst noted.
After coking plants accepted a second round of met coke price cuts on Wednesday under pressure from steelmakers, the 30 merchant coke makers surveyed regularly by Mysteel reported an average loss of RMB 25/t on Thursday — compared with an average gain of RMB 18/t the previous week — marking their first loss since mid-March, according to the data.
Amid the mounting financial pressure, some leading coke makers across China’s major producing hubs had reached a consensus yesterday to stabilise their met coke prices by reducing production around 30%, according to market sources.
Meanwhile, the coking plants also indicated that they would focus on procuring more cost-effective coking coal supplies, seeking to avoid further margin pressure from high raw material costs, sources also noted.
Coking plants reportedly focused on higher-quality grades like primary coking coal and fat coal, while maintaining pressure on other blending coal prices, as reported.
Yesterday, the price for washed Anze low-sulphur primary coking coal (A 9%, S 0.5%, G 85) — a premium grade produced in Linfen city, North China’s Shanxi province — fell by RMB 10/t on day to reach RMB 2,010/t EXW with VAT, according to Mysteel’s assessment. Though tiny, it still marked its first retreat in about a month.
“Since steel mills may persist with their push for a third round of met coke price cuts, coke makers’ willingness to accept high-priced coking coal is likely to weaken further in the near term, given the limited prospects for a meaningful demand recovery,” a market observer said, adding that coking coal prices are therefore set to move lower.
Mirroring the prevailing pessimism, the most-traded September coking coal contract on the Dalian Commodity Exchange fell by 2.4% from the prior day’s settlement price in the nighttime session, settling at RMB 1,206.5/t.
Note: This article has been published in accordance with a content exchange agreement between Mysteel Global and BigMint.
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