China’s met coke futures slump on dimming demand outlook

• Hot metal output, pollution curbs pressure coke, steel output
• Production at BF-based mills in Hebei may drop on pollution curbs

Mysteel Global: China’s metallurgical coke futures prices logged significant drops on December 5, as sentiment among many market players was largely dented by the expectation that demand for spot met coke would falter further alongside reductions in steelmakers’ hot metal production in the coming weeks.

On the Dalian Commodity Exchange, the most traded met coke contract for next January delivery tumbled 3.2% from last Thursday’s settlement price to close Friday’s daytime trading session at RMB 1,585/tonne ($225/t).

Market analysts pointed to the bearish expectation for met coke demand in the near term as one of the key factors driving this dive in futures prices.

According to Mysteel’s survey of 247 blast furnace (BF) mills across the country, their average output of hot metal had dropped by another 1% on week to 2.32 million tonnes/day over November 28 – December 4. Notably, the volume was also lower by 0.1% from the year-ago level, marking the first on-year output decrease so far this year.

Domestic mills remained in widespread losses despite recent slight improvements in profitability, according to a Shanxi-based analyst. The heavy financial burdens forced them to slow down operations, he added, predicting that mills should continue cutting production in the coming weeks.

Meanwhile, production at BF mills in North China’s Hebei province — a major steelmaking hub of the country — could also be disrupted this week, as local governments had issued new warnings about air pollution.

According to authorities in Xingtai, Handan and Cangzhou, these three cities in Hebei will take measures from Monday noon to control and alleviate the pollution, with the warnings expected to be lifted around December 11.

Last Friday, Mysteel’s assessment of China’s quasi-first-grade met coke prices, for wet-quenching and dry-quenching types respectively, stayed unchanged from the previous session at RMB 1,532.3/t and RMB 1,674.5/t including the 13% VAT.

In the portside market, Mysteel assessed the first-grade met coke (ash 12.5%, sulfur 0.65%, CSR 65%, MT 7%) price at RMB 1,550/t last Friday, on an ex-stock basis at Qingdao port in East China’s Shandong province with VAT, down RMB 10/t from the previous day.

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