Chinese met coke prices may ease slightly in June
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Though Chinese prices of metallurgical coke will likely remain stable in the first half of June, they will probably face some downward risks in the second half with the approach of China's slow season for steel consumption in summer, Mysteel shared in its monthly outlook report. However, any drop in price should not be very large, it noted.
During the past month, China's coke market had seen the price hike demanded by coke makers on 1 May accepted, but the mills replied in kind later in the month on 21 May by persuading the coke producers to accept a price cut, as Mysteel Global reported. Following that, the country's coke prices have remained largely stable since late May because both rising coke supply and demand have contributed to a general balance in coke prices.
By the end of May, China's national composite coke price under Mysteel's assessment had remained largely unchanged on month at yuan 2,004.6/tonne ($276.1/t) including the 13% VAT, only up by yuan 10.1/t from end-April.
According to Mysteel's forecast, the trend will probably continue until mid-June and then prices may move lower.
Since China's central government had announced fresh steps to bolster the real estate sector last month, finished steel prices nationwide have also gained some support and shown some signs of recovery. This, along with their lighter cost burden, prompted domestic steel producers to increase their steel output in May.
The steady climb in hot metal output since last month will likely continue this month, the report said, predicting that Beijing's fresh policies will help to support steel prices and encourage steelmakers to keep their production steady.
Mysteel's survey showed that this month, the daily hot metal output among the 247 domestic blast-furnace steelmakers under Mysteel's survey may inch up by around 0.8% from May to average 2.38 million tonnes (mnt)/day.
On the supply side, domestic coke makers are also expected to keep their production steady this month, according to the report. Any significant drop in coke production is hard to see in the near term if these makers are still able to earn some profits when selling their coke, it observed.
However, Mysteel cautions that coke prices could face downward pressure. Coke supply is likely to grow faster than demand, as Chinese steelmakers have been maintaining low inventory levels and purchasing only enough material for their near-term production needs.
Moreover, the profitability of steelmakers is closely tied to coke price trends, and if steelmakers' margins shrink to unsustainable levels, they may pressure the coke suppliers to accept additional price cuts.
The report also notes that hot metal output at Chinese steel mills is likely to peak in June and then begin to decline as the summer lull in steel consumption takes hold, possibly leading to a slight retreat in demand for coke.
Note: This article has been written in accordance with an article exchange agreement between MySteel Global and BigMint.
