China: Met coke makers’ losses to deepen amid dim outlook

• Steel market bearishness to persist among seasonal rains
• Potential steel output cuts may further reduce coke prices

Mysteel Global: As of 12 June, the Chinese metallurgical coke market remained bleak. While margins of met coke makers worsened after the RMB 70-75/tonne (t) ($9.8-10.5/t) price cut materialising on 6 June, the persistent market downturn may lead producers to incur more losses in the near term.

Yesterday, the national composite met coke price assessed by Mysteel remained flat from the previous session at RMB 1,174.1/t, including 13% VAT.

According to Mysteel’s latest weekly survey result, the average loss among 30 independent met coke producers Mysteel regularly tracks amounted to RMB 46/t as of 12 June, higher by RMB 27/t from the previous week.

Notably, sampled producers in North China’s Shanxi province also recorded a loss of RMB 19/t compared with their moderate margins of RMB 5/t last week. While Shanxi is the primary coke-producing area in the country, worsening margins among manufacturers in the region largely reflected deteriorating conditions for producers across the country, Mysteel Global notes.

However, most market participants consider that the downtrend will persist in the near future, as bearishness in the downstream steel segment is still developing, according to sources.

Indeed, apart from the impacts of the nationwide rainy season, Typhoon Wutip (Butterfly) is forecast to land in parts of South China on 13 June, which had already called a halt to most construction activities in the affected regions yesterday.

In response, Mysteel assessed the national price of HRB400E 20 mm dia rebar at RMB 3,231/tonne (t) ($450.3/t) on Thursday, including 13% VAT, marking an RMB 5/t decline from Wednesday.

Due to consistent fluctuations in steel prices recently, more mills are reducing production volumes to eliminate potential risks, a Shanghai-based analyst said. Demand for met coke has, therefore, been waning, which may lead to a fourth price cut in the future, he added.

Futures prices mirrored the gloomy outlook yesterday. On the Dalian Commodity Exchange, the most-traded September met coke contract closed the daytime trading session at RMB 1,328.5/t, down 1.77% from Wednesday’s settlement.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.