Chinese coke plants report slower production rates

Mysteel: Production of metallurgical coke by the 230 independent Chinese coke firms tracked in Mysteel's weekly survey slowed by another 1,400 tonnes (t)/day (d) on week during the week of 29 August-4 September to average 510,200 t/d, according to the latest survey results. The decrease was far milder compared to the previous week's 15,400 t/d tumble, Mysteel Global noted.

The pace of production cutbacks among coke producers eased slightly as some steelmakers had resumed operations during the sample period after completing maintenance, survey respondents explained, prompting them to purchase some coke cargoes.

However, most coke makers were still cautious about lifting production, as their motivation had been substantially weakened by prolonged losses and rising coke inventories.

Mysteel's survey conducted among a smaller sample of 30 merchant coke producers nationwide revealed that as of 5 September, these firms were incurring an average loss of yuan 96/t ($13.5/t) on coke sales, higher by yuan 10/t from a week earlier. Over 30 August-5 September, total coke stocks at the 230 coke plants Mysteel monitors rose by 17,900 t on week to 469,700 t, the latest survey showed.

Over the survey week, though a few steel producers had resumed coke purchases for production needs, most still took cautious stance regarding materials procurement, given their still-poor margins.

During 30 August-5 September, daily hot metal output among the 247 Chinese steel mills under Mysteel's monitoring finally recovered from its six-week slide to average 2.23 million tonnes (mnt)/d, up by 17,200 t/d on week, the survey findings showed.

This turnaround in hot metal output may signal a gradual improvement in steel production as the steel sector enters September, traditionally a peak month for steel consumption, a Shanghai-based analyst said. However, he warned that a rapid increase in production is probably unlikely as many mills will still be hesitant about boosting steel production quickly for fear that the steel demand recovery will pull up well short of their expectations.

Meanwhile, prices of ferrous futures in China proved rather soft this week, reflecting the bearish sentiment still prevalent among market participants, with most still awaiting more clarity on the steel market outlook.

As of 5 September, China's national composite coke price under Mysteel's assessment stood at yuan 1,592/t and including the 13% VAT, down by yuan 13.2/t on week, the data showed.