The Chinese domestic market for metallurgical coke has remained mostly stable throughout the current week, with the first round of price uptick widely accepted by steel mills.
Major mills in Shandong and Tangshan regions accepted the first upward revision in prices by RMB 50/t. Market participants expect further upward movement in domestic coke prices as mills would require to replenish their met coke inventories to meet steel making needs.
At present, the country’s coking plants are willing to maintain high operating rates on the back of comfortable profit margins. Environmental protection policies are also relatively less strict and blast furnaces are operating at high rates, which may entail a second round of price hike in the domestic met coke market segment.
China’s domestic met coke prices are expected to stay supported in the near term. However, the key determinant for met coke price movements would be dependent on steel sales in China.
Coking coal market holds stable as demand gradually picks up
Following steel mills’ acceptance of met coke price hike, coking collieries are vehemently looking to hike their prices as well. Currently, the willingness to purchase from coking plants is sound and collieries eye on lowering the inventory level, though some with low inventory hold back offers on expectation of higher prices. It is expected that coking coal price may remain stable in the short term.
On supply side, the supply in Shanxi and Inner-Mongolia regions is tight whilst the purchasing enthusiasm from downstream is sound, elbowing up the price to varying extents. The output and shipments in northern Shanxi province were little changed with a focus on executing long-term contracts and local sales is as usual.
On port front, the inventory level in north ports draw down from high position amid vehement sentiments to back price amongst traders. Purchase enquiries from downstream turned weak and actual transactions fall short of expectation.
However, transports in areas such as Shanxi’s Linfen and Changzhi are interrupted resulting in stock build-up.
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By Aditya Sinha
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