China's met coke market remains stable, but uncertainty looms

• Producers, mills in stalemate over coke prices
  
  
• Poor steel margins to continue pressuring tags
  
  

Mysteel Global: China's metallurgical coke market was stable on 26 November, with the national composite coke price under Mysteel's assessment standing largely unchanged at RMB 1,700.8/tonne (t) ($233.9/t) including 13% VAT, down by a tiny RMB 0.5/t d-o-d. However, uncertainty looms, with steel mills still incurring losses on sales.

Sources shared that domestic coke producers and steelmakers seem to have entered a seesaw war on coke price adjustments, which continued delaying mills from formally requiring a new price reduction and will likely keep the market steady temporarily.

This favourable change, which may not last for long, was based on the fact that many steel mills still have to secure enough supply of coke to keep their blast furnaces running smoothly, as they have not planned to slash hot metal output significantly.

Besides, steel prices continued logging small gains in recent days. Participants also expect some new support for the steel market if mills start preparing for winter restocking, sources said.

As of Tuesday, Q235 150 mm square billet prices in Tangshan, the top steel-producing hub in North China's Hebei province, under Mysteel's assessment, edged up by RMB 20/t d-o-d to RMB 3,090/t exw, including VAT. This marked an uptick in tags for the second straight day, following an RMB 40/t loss last Friday.

As for coke producers, they will likely maintain smooth deliveries to customers and operate with low inventories, given their steady margins and relatively stable demand from mills, according to a Shanghai-based analyst.

For example, on Tuesday, firms in North China's Shanxi province could still enjoy profits of RMB 55/t and RMB 108/t, respectively, for selling wet-quenching and dry-quenching quasi-first-grade met coke, with earnings from main by-products also included, higher by RMB 7/t d-o-d, respectively, Mysteel's survey showed.

Yet downward pressure remains for China's met coke market in the near term, as mills are still struggling with losses on sales during the traditional off-season for steel consumption, market watchers said.

Yesterday, coke futures continued to weaken, albeit mildly, which prompted port traders to hold their quotations unchanged for spot cargoes to domestic coastal end-users, market sources noted.

As of Wednesday morning, coke stocks at Rizhao and Qingdao in China's Shandong province totalled 1.21 million tonnes (mnt), down by 40,000 t from the previous week.