China: Hebei steelmakers launch 3rd round of coke price cut

Mysteel: More signs of weakening in the Chinese metallurgical coke market appeared on 8 August, as some steelmakers in Tangshan, North China's Hebei were considering pushing for another reduction in coke prices by yuan 50-55/tonne ($6.9-7.6/t) effective from 10 August, Mysteel Global learned from sources.

On Friday morning, Mysteel heard that a leading steelmaker in Hebei announced to trim the coke merchant prices by the same degree, effective from 10 August. Steelmakers' unrelenting efforts to cap coke prices were mainly because their widening financial losses along with the persistent declines in finished steel prices. As of 8 August, the average profit ratio enjoyed by the 247 blast-furnace steel mills across China under Mysteel's regular tracking had declined further to just 5.19%, aggravating from the previous week's 6.49%.

In response, steel mills further reined in their hot metal production this week, which further reduced their demand for coke. For instance, daily hot metal output of the sampled 247 steelmakers averaged 2.32 million tonnes (mnt)/day during 2-8 August, down by a large 49,200 t/d on week, Mysteel's survey showed.

Accordingly, mills became less interested in restocking coke this week, trying to ease the losses on selling steel in current slack season. By 8 August, coke stocks held by the 247 surveyed mills had thinned by 69,300 t or 1.3% on week to reach 5.36 mnt, hitting its lowest record since July 2011.

The demand outlook for coke stayed bearish in the near term due to steel mills' output cut plans, indicating that the fundamentals for coke market could worsen further, a market watcher said. He predicted that following Tangshan-based mills' move, more mills across the country could join the rank to push for lower coke selling prices soon.

On Thursday, China's national composite coke price under Mysteel's assessment was stable on day at yuan 1,839.7/t including VAT. At Rizhao and Qingdao ports in East China's Shandong province, coke stocks totalled 1.42 mnt as of Thursday, down by 50,000 t on week, Mysteel's tracking data showed.

This article has been written in accordance with an article exchange agreement between Mysteel Global and BigMint.