As of 13 May, China’s leading steelmakers had remained muted for a week about coke firms’ proposal for another Yuan 100-110/tonne ($13.8-15.2/t) hike in metallurgical coke prices, pointing to the increasing possibility that such an attempt may end in failure, market sources said.
On Monday, China’s national composite coke price was assessed by Mysteel at Yuan 2,097.9/t including VAT, unchanged from Saturday, a substitute working day after China’s Labour Day holidays.
Domestic steel mills were vigorous in coke purchases recently as they accelerated their hot metal production. Over 3-9 May, the hot metal output produced by the 247 Chinese steelmakers under Mysteel’s tracking gained by 1.7% on week to average 2.35 million tonnes (mnt)/day, larger than the 0.9% on-week rise recorded in the previous week.
However, despite their robust demand for coke, mills displayed strong resistance to further rises in coke prices as they found coke makers enjoyed better profit margins.
Mysteel’s survey conducted on coke producers in North China’s Shanxi province showed that they earned an average of Yuan 50 on every tonne (t) of dry-quenching quasi-first-grade met coke they sold on 13 May, a rise of Yuan 14 compared with that on 11 May.
For coke makers, many of them were active in lifting their production in pursuit of profits, with some almost running at their full capacity, sources said. As such, coke firms generally maintained steady purchases of coking coal to meet their near-term production needs, especially when purchase costs of coking coal have declined somewhat lately.
Mysteel’s tracking data presented a 4.7% on-week growth in coking coal inventories at the 230 independent coke firms that it monitored as of 9 May, sending the total volume to reach 7.54 mnt.
With prolonged tussle over higher coke prices between coke and steel producers souring the market sentiment, coke prices are expected to face downside risks as some steelmakers were heard to mull over a reduction in their coke purchase prices, a market watcher said.
At Rizhao and Qingdao ports in East China’s Shandong province, coke stocks totalled 1.7 mnt as of 13 May, up by 20,000 t on week, Mysteel’s tracking data show.
Note: This article has been exchanged under the article exchange agreement between BigMint and Mysteel.