Met Coke: Chinese domestic producers demand higher prices
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Several independent metallurgical coke producers in North China have announced intention to raise their offer prices for merchant coke by another Yuan 50/tonne (USD 7.20/MT) effective this week, according to Mysteel -- a China-centric insight and global metal markets intelligence providing company.
Notably, this marks the opening salvo in the merchant producers' first price battle for 2020 and follows their run of three increases successfully accepted since last November.
For instance, North China's Xingtai-based Hebei China Coal Risun Coking increased offer prices on its major merchant coke products by Yuan 50/t effective on Wednesday. After the adjustment, the company's price for dry-quenching coke with 12.5% ash, 0.65% sulphur and 60% CSR will be Yuan 2,140/t ex-works including the 13% VAT.
If similar requests were spread to East China and other regions, it will be the fourth time since coke makers started raising offer prices for coke nationwide since late November 2019.
Prior to the latest requests from the coke plants, over the past two months the domestic mills had conceded to pay Yuan 150/t more in total when procuring coke. For this latest push, the coke makers are citing virtually the same reasons as previously in their pricing messages to justify their demands, namely the high cost of raw materials procurement or the existing air pollution measures which had affected coke production, reducing supply.
An independent coke plant based in North China's Shanxi, for example, is telling its buyers the decision to raise offer prices on its coke had to do with "tougher measures curtailing air pollution" - a reference to local government-enforced output cuts to improve air quality - and "the recent snowy weather (in Shanxi) that has impacted raw materials deliveries, which markedly lifted their cost".
Over January 5-7, heavy snow had hit many cities of Shanxi and forced authorities in the province to temporarily block some highways to reduce risks of accidents. According to official information, as of Wednesday morning heavy-duty trucks were still banned on some stretches of highway because of the presence of black ice. As of Wednesday morning, however, few steel mills in North China had accepted the latest round of hikes.
"The bad traffic has also disrupted the delivery of coke from Shanxi too," commented an official with a steel plant in Hebei. As a result, coke stocks at those coke producers have increased as well, a factor undermining support for coke prices, he explained. Shanxi is China's largest producing hub for both coking coal and coke.
That finished steel prices are softening is also prompting steel producers to resist agreeing to pay more for their merchant coke, he added.
Meanwhile, increasing metallurgical coke prices are fueling pellet demand, as pellets can help to reduce met coke consumption in blast furnaces.
PRICE ASSESSMENTS
Chinese metallurgical coke export prices for the 64% CSR and the 62% CSR grades are assessed at around USD 290.00/MT and USD 277.00/MT FOB China respectively.
Indian metallurgical coke import prices for the 64% CSR and the 62% CSR grades amount to USD 280.00/MT and USD 262.00/MT respectively on CNF India basis.
Currently, India's domestically produced metallurgical coke prices for the blast furnace grade are hovering at around INR 24,000/MT (east coast) and INR 23,750/MT (west coast).
