Chinese Met Coke Prices to Keep Weakening in March

Domestic prices of merchant metallurgical coke across China will possibly keep trending downward throughout this month, amid lukewarm demand from steel mills, according to the latest survey by Mysteel -- a China-centric insight and global metal markets intelligence providing company.

Respondents said plunging finished steel margins were forcing mills to reduce production and press down raw materials' procurement prices.

As of March 3, Mysteel's composite met coke price was assessed at Yuan 1814.4/tonne ($259.2/t) including the 13% VAT, down Yuan 63.9/t on month.

As of February 27, met coke stocks at the 110 Chinese steel plants under Mysteel's regular survey had fallen by 67,400 tonnes on month to 4.64 million tonnes, while coke stocks at the 230 independent coke plants determined by another regular Mysteel survey also decreased 87,400 tonnes on month to 1.67 million tonnes.

Although the disruptions to truck transportation experienced last month have gradually eased, the pace at which these independent met coke enterprises have drawn down their stocks has been slow. In addition, the easing of coking coal supply availability enabled more domestic met coke producers to resume operations, with the average coking capacity utilization rate of the 230 independent coke plants jumping by 4.6 percentage points on week or 1.17 percentage points on month to 66.9% as of February 27. The slow declines in stocks and the continuous increase of output are adding to the concerns of met coke mills.

On the other hand, Chinese steel mills' appetite for met coke remains low as their finished steel sales have stalled amid the weak downstream demand. At the same time, the high finished steel stocks and the plunging steel margins may continue to compel steel mills to reduce output or halt production to conduct maintenance on facilities.

As of February 27, the blast furnace capacity utilization rate of the 247 steel mills Mysteel surveys regularly dropped further to hit a near five-month low of 73.82%, indicating their weaker appetite for raw materials.

Consequently, steelmakers are now buying met coke only when in urgent need and are trying to lower raw material buying prices to control cash flow, the survey results indicated.

For example, steel mills in North and East China clipped Yuan 50/t off their merchant coke procurement prices last week, and beginning this week, the mills initiated a new campaign to wring an additional Yuan 50/t price reduction out of the met coke plants.

Moreover, Chinese met coke producers are under great pressure from squeezed margins. Mysteel's latest survey among the 30 independent coke plants across China showed their coke margins averaged Yuan 106/t as of February 27, down Yuan 37.43/t on month.

On March 3, Mysteel's national HRB 400 20mm dia rebar price had softened further to refresh its 34-month low of Yuan 3,611/t including the 13% VAT.

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