China’s metallurgical coke market saw a new round of price tussle emerge between coke producers and steel mills, following several firms’ proposal to raise coke prices to alleviate losses.
A few coke firms in northern and northwestern China proposed in the middle of the week to increase coke prices by 100-200 yuan/t effective from November 16 and 17, which had been rejected by some mills for reason of still thin margins and no significant improvement in end-user demand.
Affected by the COVID curbs regionally in Wuhai and Ordos of Inner Mongolia, Shaanxi and Shanxi, coking coal prices and transportation costs continue rising, adding to operational pressure of coking plants, one Inner Mongolia-based coke firm explained in a price change letter that proposed to raise Grade II coke prices by 200 yuan/t.
A 100 yuan/t price hike proposal was heard in a large coke firm in Ningxia on November 16.
The proposals came as demand by mills and traders moderately rebounded after three rounds of coke price cuts but participants expected they are less likely to materialize considering mills still struggled to reach break-even.
Data showed, the ex-factory price of common square billet at key mills in Tangshan, Hebei stood at 3,560 yuan/t on November 16, while the VAT-included costs were 3,644 yuan/t, indicating a loss of 84 yuan/t, although it narrowed by 86 yuan/t compared with the week-ago level.
Besides, there is still a downside risk of demand for the steel-making material in the near term, considering steel production curbs intensified in some major production areas in a bid to reduce air pollution and limit the whole-year output volume.
Sxcoal learned the leading steelmaking city Tangshan has imposed a level-II emergency response to curb pollutions starting from November 17 until further notice. Liaocheng in Shandong also implemented a level-II response with effective time covering November 17- 20.
Steel production, as a major polluter, is expected to be restricted to varying degrees.
Jiangsu asked local steel mills to limit crude steel production in 2022 at or below the level of last year, and some mills have received notice to arrange maintenance to their blast furnaces.
The province produced 91.69 million tonnes of crude steel during the first nine months, up 417,500 tonnes compared with the year-ago level, according to National Bureau of Statistics.
The monthly figure during October-December should be 9.18 million tonnes or lower on average to meet the target, much lower than 9.82 million tonnes in September.
“Coke prices are less likely to rise at present but also less possible to fall again amid cost support,” said one Luliang-based coke firm in Shanxi, citing firm offers at mines.
One online auction of 2,000 tonnes of low-sulfur primary coking coal (S 0.6%, A 8%, G 95) in Jinzhong of Shanxi was concluded at 2,277-2,292 yuan/t on November 16, up 79.5 yuan/t compared with November 8, Sxcoal learned.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
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