China: Met coke prices to fluctuate, then rise in Dec'24

• Negotiations underway over 4th straight price cut
  
  
• Rebound likely by Dec-end amid winter stockpiling
  
  

Mysteel Global: Chinese metallurgical coke prices are expected to decline further before stabilising or experiencing a mild rebound in the latter half of December, Mysteel predicts in its monthly outlook report on the commodity. The outlook for the year's final month points to prices strengthening overall, following some fluctuations.

Since late October, leading mills in North China's Hebei province and East China's Shandong had managed to persuade independent coke makers to accept a series of price reductions, in the range of RMB 150-165/tonne (t) ($20.6-22.7/t) depending on region. Coke prices soon started to show signs of softening before plateauing in the latter part of November.

As of 29 November, China's national composite coke price under Mysteel's assessment reported a m-o-m decline of RMB 88.1/t to RMB 1,700.8/t, including 13% VAT.

Currently, negotiations are underway between domestic steel mills and coke producers over a potential fourth consecutive price cut. The primary motivation for mills' persistent push for lower procurement prices is the ongoing weakness in steel tags and sluggish demand from end-users during winter. This has heightened their need to control costs to avoid deeper losses.

Meanwhile, the ongoing drop in coking coal prices has allowed many coke producers to maintain profitability, which has helped offset some of the impact of the previous coke price cuts. This may weaken their bargaining position amid the prolonged tug-of-war over coke prices, making it likely that coke makers will eventually concede to further cuts.

As a result, Mysteel forecasts that a fourth price cut could be agreed upon in early December.

Despite this, there are several factors that should prevent coke prices from declining very substantially, indicating a relatively optimistic outlook.

For one, many steel mills are expected to start stockpiling raw materials ahead of the harsh winter season. This could tighten supply and provide some support for coke prices.

For example, total coke stocks held by the 247 steel mills Mysteel monitors nationwide had mounted by 250,300 t from early November to sit at about 6.04 million tonnes (mnt) as of 28 November. This is considerably higher than the 5.82 mnt held by steelmakers at the same time last year.

Moreover, the fact that over half of China's blast furnace steelmakers are still able to make profits on steel sales suggests that significant cuts in production are unlikely in December, which should help maintain some stability in coke prices.

Additionally, China's top regulators will hold meetings in the first half of this month which will set the tone for the domestic economy over the coming year, Mysteel's report noted. New economic pump-priming measures would likely give a boost to market sentiment, buoy ferrous prices, and may lend much-needed support to raw material tags as well.

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