China: Met coke makers' losses widen after price cut

• Coke makers curb output amid widening losses
  
  
• Coke demand falls as more mills cut production
  
  

Mysteel: China's metallurgical coke prices were still weak on 9 January after slipping the previous day. The RMB 50-55/tonne (t) ($6.8-7.5/t) price cut has squeezed many coke producers' margins, and some of them have started to further rein in production to avoid larger losses, according to market sources.

Mysteel's survey conducted among a sample of 30 merchant coke producers revealed that as of 9 January, they were losing an average of RMB 16/t when selling their met coke, an increase of RMB 13/t from the prior week.

Last week, more merchant coke makers across the country bowed to steelmakers' demands, made earlier in the week, to reduce their coke selling prices, Mysteel learnt. This weighed on their profit margins.

As of 9 January, China's national composite coke price under Mysteel's assessment stood at RMB 1,582.8/t, including VAT, down by RMB 34.7/t d-o-d.

Production of metallurgical coke contracted slightly this week, impacted by the expanded losses for coke makers as well as output cuts for environmental concerns in some areas. The daily coke output of the 230 Chinese independent coke firms that Mysteel surveys slipped by 6,100 t or 1.2% w-o-w during 2-8 January to average 516,800 t.

On the demand side, more Chinese steel mills chose to cut their production this week, as they were still struggling with lower margins when selling finished steel. This also curbed mills' appetite for met coke. Findings of Mysteel's survey showed that the daily hot metal output among the 247 mills over 3-9 January decreased by 8,300 t w-o-w to an average of 2.24 million tonnes (mnt).

China's portside coke market stayed weak on Thursday due to bearish sentiment. Bids from domestic coastal steel mills for portside coke hovered lower. At Rizhao and Qingdao ports in Shandong province, coke stocks totalled 1.27 mnt on Friday morning, up by 50,000 t w-o-w, Mysteel's tracking data show.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.