China: Outlook for met coke market stays dim

The metallurgical coke market in China still lacked upward momentum on 8 July, as the new round of coke price hikes remained on hold among domestic coke producers. Besides, negative signals from the downstream steel market also suggested a dim outlook for coke prices in the short run, according to industry sources.

Since last week, many market participants expected domestic coke makers to initiate another round of price hikes. However, as of Tuesday morning, no official announcements have been made by leading coke producers. "This round of price increases is likely to be briefly shelved, as most coke enterprises are still able to earn some profits for now, while steel mills' profits might be further eroded by weak finished steel prices," a Shanghai-based analyst said.

For example, as of 8 July, coke firms in North China's Shanxi province reported profits of yuan 5/tonne ($0.7/t) and yuan 84/t respectively for selling wet-quenching and dry-quenching quasi-first-grade met coke, expanding by yuan 5/t and yuan 4/t compared to one day before, Mysteel's survey showed. As such, most coke makers in China maintained stable production and were active in making deliveries of coke products to customers for now, market sources said.

While domestic steelmakers were grappling with sluggish steel prices and sales lately, as scorching weather in many regions of China continued to hamper outdoor construction activities, Mysteel Global noted.

The weakening steel prices are expected to hurt steelmakers' profit margins and discourage them from purchasing more steelmaking ingredients, which might, in turn, press down coke prices in the near future, Mysteel Global learned.

The national composite coke under Mysteel's assessment was unchanged from Friday at yuan 1,965.4/t including VAT on Monday. At Rizhao and Qingdao ports in East China's Shandong province, coke stocks totalled 1.49 million tonnes (mnt) as of 8 July, down by 55,000 tonnes (t) on week, Mysteel's tracking data showed.

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