China's coking plants accept CNY100/t coke price cut

Most coking plants in North and East China have agreed to reduce their coke sales prices by another CNY 100/tonne ($15.4/t) after leading steelmakers in these regions pressed for the same adjustment on March 8.

The cut is the third consecutive reduction since the end of Chinese New Year break in mid-February, during which coke stocks at both coke producers and steel mills have increased markedly.

As of March 9, Mysteel's national composite coke price index dropped CNY 77.9/t on week to CNY 2,501.4/t including the 13% VAT, touching a near two-month low.

"Despite their good appetite, steel plants' enthusiasm for coke procurement cooled recently because of the rise in coke stocks at hand", an industrial source in North China's Shanxi remarked.

Traders' replenishment activity softened too, as the bearish coke market may linger for some time to come, he added.

Mysteel's survey shows that total coke stocks at the sampled 110 steel plants across China swelled by 6% on week to a 6.5-month high of 4.8 million tonnes as of March 4, which could sustain the steelmakers for 14.7 days, based on their consumption the same day.

The slower coke sales have been reflected in coke plants' coke stocks too, as those at the 230 Chinese independent coking plants Mysteel checks had jumped 33% on week to over 1 million tonnes as of March 4, a high since early August 2020.

"Steelmakers' costs have slid recently following the decline in raw materials prices, among which the lower coke price was a key contributor", commented a Shanghai-based coke analyst. "However, finished steel sales have not recovered to their pre-holiday (Chinese New Year) levels, which forced these plants to keep squeezing down their costs", he added.

The commissioning of new and advanced coking capacity - as replacements for previously eliminated obsolete ovens - and their gradual ramp-up of production could see China's coke supply tightness ease further, the analyst anticipated.

Note: This news article is published under a data exchange agreement between CoalMint and Mysteel - a China-centric insight and global metal markets intelligence providing company.