China: Coke prices rise amid firm demand, rising profits

Mysteel Global: Following the three-day Mid-Autumn Festival holiday, some steelmakers in North China's Hebei and Tianjin announced on 18 September that they agreed to the hike of RMB 50-55/tonne (t) ($7-7.7/t) in coke prices that domestic coke producers had proposed before the break, effective from today.

Industry sources pointed to firm demand for raw materials and improved profits among domestic steelmakers as key reasons for mills' decision to accept the price hike. Leading steelmakers are expected to follow suit and agree to the price rise today, according to a Shanxi-based analyst.

This will mark the first uptick in coke prices after steel mills cut their coke buying prices on eight successive occasions, totalling RMB 400-440/t so far from late July, Mysteel Global learned.

In fact, domestic coke firms have been suffering deepening losses since mid-August, which propelled them to hike prices and ease losses. For example, Mysteel's survey indicated that as of 18 September, coke producers in North China's Shanxi province recorded an average loss of RMB 204/t from selling wet-quenching quasi-first-grade metallurgical coke, compared to the prior week's RMB 79/t loss.

However, since early September, many steelmakers have ramped up their coke purchases to meet higher demand with the restart of blast furnaces, thanks to narrowed losses on selling finished steel products.

For instance, the average loss of ten major steel mills in North China's Tangshan city had mitigated by RMB 107/t w-o-w to RMB 158/t as of 18 September, Mysteel's data showed.

Despite these positive trends, the further growth of coke prices will still depend on domestic steel price movements. "If steel prices show further signs of improvement, more rounds of price increases for coke are likely to materialise in the coming weeks," a market insider remarked.

As of Wednesday, the national composite met coke price under Mysteel's assessment remained steady from Saturday at RMB 1,545.2/t, including 13% VAT.

The mood in China's portside coke markets also improved slightly on Wednesday, and bidding prices for portside coke from domestic coastal steel mills moved up by RMB 20/t. At the Rizhao and Qingdao ports in Shandong province, coke stocks totalled 1.38 million tonnes (mnt) as of yesterday, down by 30,000 t w-o-w, Mysteel's tracking data shows.