China: Outlook for met coke market dims on lower demand

• Chinese mills resist met coke hikes amid steel production cuts
• Hot metal output, coke futures & portside prices show decline

Mysteel Global: Market players’ confidence for a successful metallurgical coke price hike in China waned on 28 August, as many steelmakers showed little appetite for costlier feedstocks while preparing to cut production, according to a Shanxi-based analyst.

On Thursday, Mysteel assessed the national composite met coke price at RMB 1,455.2/tonne (t) ($204.2/t), including the 13% VAT, flat from the previous session.

According to market sources, steel mills in North China’s Hebei province stayed largely resistant to coke producers’ price hike proposal, as they soon intended to reduce hot metal production, as demanded, by 40% of full capacity during 31 August-3 September.

In fact, hot metal output among Chinese mills had dipped slightly this week. According to Mysteel’s survey over 22-28 August, hot metal production at the 247 blast-furnace mills under Mysteel’s tracking averaged 2.4 million tonnes (mnt)/day, down 0.3% w-o-w.

With more furnaces expected to be idled around the end of this month, analysts estimated that hot metal output would continue declining next week. According to Mysteel’s survey on 23 integrated mills in Hebei’s Tangshan city, the average capacity utilisation rate of their 89 blast furnaces would drop to around 78.1% next week, down by 10.7 percentage points from this week and 6.8 percentage points on year.

Considering their waning demand for raw materials, steelmakers were not willing to accept higher costs for met coke, although supplies of top-charged types for some mills in Hebei were relatively tight, a market observer noted.

The softened sentiment in the spot market extended to the futures market. The most-traded met coke contract for next January delivery on the Dalian Commodity Exchange dipped by another 0.5% from Wednesday’s settlement price to end Thursday’s daytime trading session at RMB 1,672.5/t.

The same day, portside traders also trimmed their quotations. According to Mysteel’s assessment yesterday, prices of first-grade met coke (ash 12.5%, sulphur 0.65%, CSR 65%, MT 7%) lost RMB 10/t from the previous session to RMB 1,580/t, on an ex-stock basis at Qingdao Port in East China’s Shandong province, including the VAT.

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