China's Met Coke Capacity Use Hits 6.5-Month High

Capacity utilization among the 230 independent coke plants across China under Mysteel's regular survey increased for an eleventh straight week over May 1-7, rising by another 0.55 percentage point on week to hit a 6.5-month high of 74.62%, according to Mysteel's latest survey.

The higher run-rate reflected the improved margins the coke plants were enjoying and steel mills' higher demand for coke, survey respondents said. Accordingly, daily output at these coke plants also grew by another 6,100 tonnes/day on week to reach a 6.5-month high of 661,300 t/d, Mysteel's data shows.

Mysteel's survey among 30 independent coke plants across China showed that as of May 7, the margins on their coke averaged Yuan 73.4/tonne ($10.5/t), up by a large Yuan 29.57/t on week.

Thanks to their healthier returns, the independent coke mills actively purchased coking coal last week to ensure that their production stayed smooth. Consequently, total coking coal stocks at the 230 sampled coke plants inclined by 127,100 tonnes on week to 12.4 million tonnes, enough to last the coke makers for 14.14 days, or 0.01 day more than the previous week.

On the other hand, Chinese steel mills had ramped up their production further after observing that domestic steel sales seemed to be holding up well and that steel inventories at both mills and traders were declining steadily. Over May 1-7, blast furnace capacity utilization among the 247 domestic steel mills under Mysteel's regular survey increased for a ninth week by 0.56 percentage point to a 7.5-month high of 89.1%.

Consequently, coke stocks at the 110 steel mills under Mysteel's weekly survey declined further by another 102,600 tonnes or 2.1% on week to reach a ten-week low of 4.71 million tonnes as at May 7. The existing stocks could sustain these mills' operations for 15.61 days on average, or 0.46 day less than the prior week.

The strengthening coke demand among mills and higher freight charges (following the reintroduction of highway tolls) finally pushed some steelmakers in East China's Shandong province to raise their procurement prices for merchant coke by Yuan 50/t from May 6. This brought an end to the continuous declines in coke prices over the past two months, as reported.

As of May 7, Mysteel's composite coke price edged up by Yuan 23.1/t from before the Labour Day holiday to Yuan 1,679.5/t and including the 13% VAT.

Note: This article has been published under an article exchange agreement between CoalMint and Mysteel Global.