Chinese coke plants' stocks remain flat, output slides

Mysteel: Coke stocks at the 230 independent coke producers that Mysteel surveys weekly throughout China remained unchanged on week at 352,100 tonnes during July 19-25, the latest survey results show. Purchases of feed coke by Chinese steelmakers cooled this week due to the mills' shrinking profits, survey respondents suggested.

During the July 19-25 survey week, interest among steelmakers in buying coke cooled substantially because of the mills' reduced appetite for feeds during the summer lull in steel consumption, Mysteel Global learned. This also came as most mills countrywide were coping with quite poor profitability due to the plummet in steel prices ahead of the implementation of new standards for rebar in two months' time.

As reported, only around 15% of the 247 steel producers under Mysteel's regular tracking could earn some profits on steel sales this week, down by a marked 17 percentage points from the prior week.

As such, most steel producers were choosing to keep their feed materials inventories low to control costs. Only a few continued to buy some small quantities of coke this week to meet their daily production needs, Mysteel Global learned. By July 25, these 247 mills were nursing 5.4 million tonnes of coke, lower by a relatively small 91,900 tonnes or 1.7% on week and sufficient to last them for 10.25 days, according to the survey data.

On the back of dwindling demand for coke among buyers, domestic coke makers were rather unenthusiastic about producing coke this week, although most could still make money when selling their products.

Over July 18-24, total coke production at the surveyed plants declined by a further 3,900 tonnes/day on week to 540,600 t/d on average, Mysteel's data showed.

Mysteel's other survey conducted among a smaller sample of 30 merchant coke producers revealed that as of July 25, they were earning an average Yuan 43/tonne ($6/t) profit on coke sales, up by Yuan 10/t from a week earlier.

As of July 25, China's national composite coke price under Mysteel's assessment stood at Yuan 1,965.4/t and including the 13% VAT, unchanged for nearly a month, the data showed.

Despite the market holding steady for now, many market sources warn that the country's coke prices will struggle to rise in the near term and may even lose ground as persistent uncertainties continue to surround the steel market. These are expected to put more pressure on the coke market and prompt domestic steelmakers to ask for lower coke prices to ease their worsening financial straits.

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