Chinese steelmakers have quickened the pace in trimming coke procurement prices now that fundamentals have appeared more preferential to them.
The domestic leading producers in North and East areas notified their coke suppliers on March 16 again, or four days after the previous cut, of clipping another CNY 100/tonne ($15.4/t) off their coke procurement prices.
In one month, the Chinese steel mills have managed to trim their coke procurement price by CNY 500/t in five rounds, with the latest three rounds or CNY 300/t in total accomplished in ten days, and the latest price decrease also dragged down Mysteel’s national composite coke price index by CNY 133.9/t on week to CNY 2,367.5/t including the 13% VAT, or down to the level on January 5.
The continuing price cuts after a total of CNY 1,000/t gain since mid-August last year are mainly due to the tilt in the fundamentals, as the commissioning of new coking capacities across China and lower blast-furnace capacity utilization rates especially in Tangshan of North China’s Hebei led to notable increases in coke stocks both at the coking plants and the steel mills, market sources shared.
“Steelmaking cost have persisted high though coking cost has declined successively,” a steel plant in North China’s Shanxi pointed out in its note circulated in the market, defending its decision to ask for lower coke prices on Tuesday, and also on March 16, a second steel mill in Shanxi also attributed the coke price trimming to high coke stocks at the works.
On March 17, leading coke makers in North China’s Inner Mongolia surrendered too, agreed on a CNY 100/t cut in domestic coke sales prices, Mysteel’s price tracking showed.
By March 11, coke stocks at the 110 Chinese steel mills reached a seven-month high of 4.9 million tonnes or up another 3.3% on week, which can last 15.4 days, or a nearly ten-month high, and the volume at China’s 230 independent coking plants grew too by 19.5% on week to 1.2 million tonnes, or a new high since May 21 2020, according to Mysteel’s weekly tracking.
“Chinese steel mills have shown rather weary enthusiasm in procuring coke recently, which has propelled coke makers to compromise on prices for sales,” said an industrial source in Shanxi, China’s largest coking base.
Coke producers in China are ready to give in, as they are conscious of possible further price declines after substantial gains and high margins earlier on, especially for now both logistics and supplies are not in their favour, Mysteel Global noted.
Some blast furnace in Tangshan have resumed operations starting March 15 after the recent severe restrictions, but industrial cargoes transportation on road has yet been back to normal after the sandstorm that swept North and Northwest China on Monday, as reported.
Note: This news article is published under a data exchange agreement between CoalMint and Mysteel – a China-centric insight and global metal markets intelligence providing company.
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