Margins of Chinese met coke producers shrink following price cut

Mysteel: China's metallurgical coke market was still thin on July 30 after slipping the previous day. The Yuan 50-55/tonne ($6.9-7.6/t) price cut has squeezed many coke producers' margins and some of them even started to rein in production to avoid losses, according to market sources.

As of Tuesday, China's national composite coke price under Mysteel's assessment stayed largely flat at 1,905.6/t including VAT, only down by a marginal Yuan 4.3/t on day.

Since Monday, more merchant coke makers across the country bowed to the demands that steelmakers made on the same day to lower their coke selling prices, weighing on their profit margins, Mysteel learned.

For example, Mysteel's survey indicated that as of July 30, coke producers in North China's Shanxi province recorded an average of Yuan 8/t loss from selling wet-quenching quasi-first-grade metallurgical coke, compared to the prior week's Yuan 18/t profit.

Mysteel also noted that the losses for coke firms were actually alleviated by deeper falls of coking coal prices that had begun before the landing of coke price cuts, which have pared their cost burdens somewhat.

Sources disclosed that many coke plants in Shanxi province are not operating at their full capacity, wary of more downside risks for the market if coke supply swell again. In fact, downward pressures still linger for coke market in the days ahead as steel prices continued falling, a market watcher warned.

As of July 30, China's national price of HRB400E 20mm dia rebar under Mysteel's assessment has slipped for the second consecutive working day by another Yuan 30/t on day to Yuan 3,387/t including the 13% VAT.

China's portside coke market stayed weak on Tuesday due to bearish sentiment. Bidding prices for portside coke from domestic coastal steel mills hovered lower, while inquiries for exported coke products were sparce. At Rizhao and Qingdao ports in Shandong province, coke stocks totalled 1.48 million tonnes as of July 30, down by 10,000 tonnes on week, Mysteel's tracking data show.

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