Chinese met coke prices have seen an uptick starting May. As we all know that, traditionally, the month of May remains peak season for China in terms of trade.
On one hand, the Chinese government aims to carry out the specific inspection in the coking industry from mid-March to the end of September to control the air quality. This will keep the overall coking capacity of China under control; on the other hand, the Chinese government aims to increase its steel production this year.
According to Coalmint Research, it is predicted that domestic coke market will operate strongly and prices are likely to remain firm in May 2019 on the following grounds:
1. Demand for coke: The demand for raw material is likely to remain robust in the second half of May. During March, China’s crude steel production remained at 80.33 MnT and Pig iron production at 66.15 MnT, rising by 10.0% and 7.6% on Y-o-Y respectively. On an average, daily output of crude steel remained at 2.5 MnT, rising about 2.2% on per month basis. In line, the average daily output of pig iron was 2.1MnT, down 0.5% in a month. A similar pattern of increase is seen in the month of April as well.
Output in steel mills in May won’t be lower than that in April. In May, steel production will continue to rise, with a possible peak in daily crude steel production.
2. Supply of coke: According to data released by the National Bureau of Statistics, China’s domestic coke output by above-sized enterprises reached 38.10 MnT in March 2019, increased by 5.4% year on year. Daily output was 1.22 MnT. In May, with the improvement of environmental protection and the alleviation of heavily polluted weather, the supply side of coke may see steady growth.
3. Coking Coal Market: In April 2019, domestic coal market saw ups and downs. Metallurgical coal price dropped and then kept stable. Thermal coal price rose and then saw a decline. In April, China Coking Coal Price Index dropped by 0.86% M-o-M. Imported coking coal price index also went down by 1.11% M-o-M.
Some ports in China strengthened inspection of imported goods and the period of clearance was prolonged. Currently, the price of Australian hard coking coal stood at USD 211/MT (CNF China), up by USD 1.75/MT from the previous week.
Besides strict inspections and prolonged port clearance, Chinese coking coal imports are seen rising. According to data released by customs, China imported 6.14 MnT of coking coal in March 2019, rising 53.1% on Y-o-Y basis and up 111% on M-o-M basis. The average import price in China was USD 133/MT rising USD 4.09/MT on M-o-M basis and down by USD 9/MT on Y-o-Y. It is predicted that domestic coking coal market will remain stable at the higher end in May. This may keep the met coke prices at the higher end as well.
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