China: Coke market remains stable, but uncertainty looms

Mysteel Global: China's metallurgical coke market was stable on 16 October. Some coke firms in the country's top producing hub announced a new price hike the same day, yet uncertainty looms with the recent softening in the steel market, industry sources shared.

By 16 October, China's national composite coke price under Mysteel's assessment stood largely unchanged at RMB 1,832.6/tonne (t) ($257.1/t) including 13% VAT, up by a tiny RMB 0.2/t d-o-d.

Just one day after the materialisation of the sixth round of coke price hikes, producers in North China's Shanxi province announced another upward adjustment of RMB 30/t in their selling prices for dry-quenching coke products from top-charging ovens, effective from Wednesday. As of Thursday morning, leading steelmakers have not responded to this.

The latest price hike was specifically targeted at top-charging coke products, which typically bear higher production costs than coke produced from stamp-charging ovens. This attempt also reflected mounting losses among coke producers in Shanxi due to recent rallies in coking coal prices.

On Wednesday, despite increased prices, coke producers in Shanxi province still reported an average loss of RMB 42/t for selling dry-quenching quasi-first-grade met coke, down by RMB 4/t d-o-d, according to another Mysteel survey.

However, uncertainty remains over mills' attitude towards this price hike, as domestic steelmakers have become unwilling to accept pricier raw material prices, meaning that a stalemate is possible between the two sides, market insiders said.

China's steel prices have not sustained their rising momentum since last week, as market sentiment turned more cautious with the impact of the country's economic stimulus measures gradually fading.

For example, as per Mysteel's assessment, prices of the Q235 150 mm square billet in Tangshan, the top steel-producing hub in North China's Hebei province, went down by RMB 120/t from October 8 to RMB 3,190/t exw, including VAT, as of 16 October.

This also partly eroded the profits of mills. Mysteel's latest survey of ten integrated steel mills in Tangshan showed that they could only earn RMB 32/t on selling steel billets as of 16 October, down by RMB 144/t w-o-w.

Yesterday, ferrous futures, including coke, continued to weaken, which prompted port traders to offer discounts of RMB 30/t in their quotations to stimulate sales.

As of Thursday morning, coke stocks at Rizhao and Qingdao in China's Shandong province totalled 1.27 million tonnes (mnt), down by 30,000 t from the previous week, Mysteel's data showed.