China: Met coke market stable, producers’ profits shrink

• Mills may initiate 2nd round of price cuts by May-end
• Coking coal prices fall, may reduce production costs

Mysteel Global: The Chinese metallurgical coke market remained generally stable as of 22 May, with the national composite met coke price assessed by Mysteel stabilising at RMB 1,293.2/tonne (t) ($179.6/t), only down by a marginal RMB 0.1/t from a day before.

Despite the stability of the market, the general profitability among the country’s coke plants weakened, with the 30 independent met coke plants under Mysteel’s survey reporting an average loss of RMB 15/t on coke sales as of 22 May, compared with an average margin of RMB 7/t a week earlier.

Specifically, the surveyed plants in eastern China’s Jiangxi bore the deepest loss of RMB 190/t, widening from an RMB 174/t loss recorded a week ago. By contrast, producers in the northern Hebei and the eastern Shandong and Jiangsu provinces still enjoyed profits, albeit being lower w-o-w as well.

For example, coke plants in Hebei province registered an average profit of RMB 47/t for selling quasi-first-grade material, narrower than an RMB 64/t margin in the previous week.

Meanwhile, Chinese domestic coking coal prices kept falling this week, which should have reduced the production costs for coke makers. Mysteel’s assessment for the national composite coking coal price stood at RMB 1,040.7/t as of Thursday, lower by a total of RMB 22.1/t from a week ago.

However, sources disclosed that some coke plants had not put those cheaper coal cargoes into use recently, which primarily worsened their financial straits.

At present, fundamentals of the met coke market remain relatively weak, suggesting that steelmakers may initiate the second round of price cuts on met coke at the end of this month, another Shanxi-based analyst warned.

As of 22 May, the prevailing offers for dry-quenching quasi-first-grade met coke in Shanxi sat at RMB 1,305-1,375/t and those for dry-quenching quasi-first-grade coke in North China’s Shandong at RMB 1,495-1,565/t, on exw basis with VAT included, flat from the previous session.

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