China: Met coke market to stabilise in near term

• Slowing decline in coking coal prices to offer support
• But sustained recovery unlikely amid tepid steel demand

Mysteel Global: Sentiment in the Chinese met coke market lightened a bit on 24 June as more participants expected price tags to stabilise in the near future. On Tuesday, the national composite met coke price assessed by Mysteel remained at RMB 1,126.2/tonne (t) ($157.1/t), including the 13% VAT, flat from the previous day.

Market players’ optimism stemmed from the resilient performance of the coking coal segment recently. As the downtrend in domestic coking coal prices started to slow down, more and more players believed that tags would bottom out soon, with minor rebounds likely ahead.

With coking coal prices levelling out, coke producers are expecting firmer cost support to help eliminate future downside pressure on coke prices, a Shanxi-based analyst said. Meanwhile, the still high output of hot metal among domestic steelmakers will also create solid demand for met coke, at least to satisfy mills’ immediate production needs, the analyst added.

Amid the improved sentiment, met coke traders in the portside market lifted their offers. At Qingdao Port in East China’s Shandong province, Mysteel’s assessment of first-grade met coke (ash 12.5%, sulphur 0.65%, CSR 65%, MT 7%) rose RMB 10/t d-o-d to RMB 1,250/t, while quasi-first-grade met coke (ash 13%, sulphur 0.7%, CSR 60%, MT 7%) was also assessed higher by RMB 10/t d-o-d at RMB 1,150/t, both on an ex-stock basis with VAT.

Still, a tangible rebound in coke prices is unlikely in the short run. “Although fundamentals of the met coke market have shown slight improvement, the impact remains quite limited as many steelmakers are cautious with purchases of the raw material due to the summer lull for steel consumption,” a Tianjin-based analyst said.

In the derivatives market, the most-traded met coke contract for September delivery on the Dalian Commodity Exchange dropped 2% from the previous day’s settlement price, ending the daytime trading session at RMB 1,351.5/t on Tuesday.

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