Chinese met coke prices to lose ground in Aug'24

As of August 5, China's national composite coke price under Mysteel's assessment had dropped by Yuan 84/t from a month earlier to settle at Yuan 1,881.4/t including VAT.

The report forecasts further price decreases for the rest of August, potentially exceeding Yuan 200/t. When steel mills try to alleviate their cost pressures, coke prices are often their primary target and lowering them an urgent objective, the report explains.

The prediction assumes that the losses being endured by Chinese steelmakers will intensify this month as finished steel prices and transaction volumes remain a drag for them, August usually being a slow month for steel consumption, it noted. The lackluster steel market will further dampen steelmakers' production enthusiasm.

Besides, behind the plummet in the country's steel prices is the looming change to rebar quality standards that will take effect from end-September, as Mysteel Global has reported, with mills and traders now rushing to sell their stocks of old-spec bars before the new standards come into force.

In fact, many domestic steelmakers have reacted to the heavy losses incurred from lower steel prices by cutting their production. Over July 26-August 1, daily hot metal production among the 247 Chinese steelmakers Mysteel canvasses plunged to some 2.37 million tonnes/day, down by 27,000 t/d from a month earlier, according to the database.

Apart from reducing production, domestic steelmakers will also continue to adopt low-inventory strategies for feed materials this month to offset part of the losses incurred from selling steel.

As of August 1, total coke stocks held by the 247 steel mills had decreased by 96,700 tonnes from early July to about 5.4 million tonnes, it said, adding that this was also below the 5.5 million tonnes they were nursing at the same time last year.

Despite strong expectations of lower coke prices, the report was still cautiously optimistic about a potential small upturn. If the steady price reductions cause domestic coke makers to suffer unbearable losses, they may also consider cutting production, which could create a tight coke supply and create an opportunity to support coke prices, it suggested.

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