- Bullish sentiment supported by tight coke supply and strong mill restocking
- Cautious sentiment emerging amid weakening steel market indicators
Mysteel Global: Chinese coke producers were heard mulling another hike on their metallurgical coke selling prices this week to further improve their profit margins. Optimism largely persists despite a growing caution among market players amid signs of weaker steel prices.
Mysteel assessed the national quasi-first-grade met coke prices at Yuan 1,677.4/tonne ($246.2/t) for dry-quenched type and Yuan 1,526/t for wet-quenched, including VAT, on Friday, both unchanged from the last session.
Sources shared that a fourth bout of met coke price hikes is expected to kick off this week, as coke firms intend to take advantage of resilient restocking needs among steelmakers to further lift their profits. Last week, integrated mills largely maintained active purchases of the feed material, wary of continuous railing disruptions while their hot metal production remained elevated.
Strong buying demand from steel mills continued to reinforce a tight fundamental landscape, with stockpiles at coke plants running lower or even completely depleted. This has greatly consolidated pricing stances among coke producers, Mysteel learned.
However, the majority of participants anticipate more challenges ahead for this price-hiking attempt, suggesting a prolonged negotiation process between coke firms and steel producers.
A source in East China predicted that coke firms may launch new price hikes this Monday or Wednesday. “I don’t expect new price upticks would win mills’ agreement before this Wednesday; instead, it could be delayed to later this month,” said a coke producer in North China’s Shanxi province.
Several sources disclosed that leading steelmakers showed reluctance about the potentially higher asking prices of met coke, citing recent retreats of steel prices and their concerns about profitability. For example, Mysteel’s national steel composite index had registered declines for three consecutive sessions since last Wednesday, settling lower at Yuan 3,594.9/t last Friday.
Demand for construction steel products is expected to shrink gradually as South China enters the rainy season in the second half of May, a prospect that remains a key concern for mills. However, a Mysteel survey indicates that steel mills plan to keep production active this week, and healthy inventory drawdowns could help cushion the impact of the demand slowdown, easing downward pressure on steel prices.
The ferrous derivatives market logged broad losses last Friday, with the most-traded coke contract on the Dalian Commodity Exchange for September delivery closing the daytime trading session 0.74% lower at Yuan 1,807/t. The mounting cautious sentiment mainly contributed to the decline.
Caution was reflected in the portside coke market as well, with trading activities stuck in a stalemate. Mysteel assessed wet-quenched quasi-first-grade coke (CSR 60%) and first-grade coke (CSR 65%) at Yuan 1,540/t and Yuan 1,640/t on Friday, respectively, ex-stock Rizhao port in Shandong in East China, both unchanged from the last session and including VAT.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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