- Third RMB 100-110/t hike amid rising coking coal costs, tight supply
- Falling coke inventories reinforce upward price pressure
The bullish sentiment in China’s metallurgical coke market persisted on 28 August, driven by a third successive round of producer price hikes as coking coal costs surged and coke availability tightened. While several steel mills have already accepted the new offers, major mills are anticipated to follow suit on August 31 the scheduled effective date for the increase.
Mysteel Coke Index (MCI) CDQ, which tracks China’s national dry-quenched quasi-first-grade met coke prices, remained unchanged at Yuan 2,003.3/tonne ($297.8/t) last Friday, while the MCI CWQ for wet-quenched quasi-first-grade met coke also held steady at Yuan 1,830.6/t.
On August 28, coke producers in China’s key producing regions – including Hebei, Shanxi, Shaanxi, and Shandong — initiate a third round of met coke price increases, seeking hikes of Yuan 100-110/t effective from August 31. The move came on the heels of two earlier rounds, which had already lifted prices by a combined Yuan 150-165/t.
Some steel mills quickly accepted the latest hikes later that day. Hebei Iron and Steel Group (HBIS) and Rizhao Steel Holding Group (Rizhao Steel) — two key steelmakers — are expected to follow suit on August 31.
With this latest adjustment, coke prices will have risen by a cumulative Yuan 250-275/t since late August. The last two rounds have accelerated the pace of gains, both targeting Yuan 100-110/t, largely propelled by surging coking coal costs and persistently tight supply.
Coking coal prices remained on an upward trajectory as of last Friday. Lingshi low-sulfur primary coking coal in Jinzhong city, Shanxi, was traded at Yuan 2,420/t, EXW with VAT, jumping by Yuan 160/t from the previous session on August 22.
Despite successive coke price hikes, most coke producers remain in the red as raw material prices continue to rise faster than coke prices. The average loss among Mysteel’s 30 surveyed independent coking plants nationwide stood at Yuan 127/t as of August 27.
Coke output remained tightly controlled while inventories continued to shrink. According to Mysteel’s survey of 230 independent coke plants, producer stocks fell to around 612,200 tonnes by last Thursday. Some producers have restricted spot sales, market sources said, further tightening the availability of marketable cargoes.
On the demand side, coke stocks at Mysteel’s 247 surveyed blast-furnace steel mills fell to 6.15 million tonnes by the same day, with inventory coverage also dropping to a new low of 10.79 days. Some mills have accelerated coke procurement amid expectations of further coke price gains. However, steel demand has yet to see a broad recovery, keeping coke purchases largely need-based.
Coke futures extended gains last Friday. On the Dalian Commodity Exchange, the most-traded coke contract for next January delivery closed the daytime session at Yuan 2,153.5/t, up 1.8% from the previous day’s settlement.
The portside market also edged higher on Friday. Mysteel assessed wet-quenched quasi-first-grade coke and first-grade coke at Yuan 1,850/t and Yuan 1,950/t ex-stock Rizhao port, respectively, both up Yuan 10/t from the previous session and including VAT. The price of dry-quenched quasi-first-grade coke also rose Yuan 20/t to Yuan 2,060/t.
Note: This article is published as part of a content sharing agreement between Mysteel Global and BigMint
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