Mysteel: Some Chinese steel mills accept 6th coke price hike

Industry sources highlighted robust demand for raw materials and increased profits among domestic steelmakers as the main factors behind these mills' decision to accept the price increase. And major steel producers are expected to follow suit and agree to the price hike today, they added.

This represented coke makers' sixth attempt to raise coke prices since mid-September, which could elevate met coke prices by an accumulative Yuan 300-330/t if the latest one is implemented nationwide today, Mysteel Global learned.

However, the price surges have brought limited profit margins for coke producers, as rising coking coal prices continued to push up their production costs, Mysteel Global observed.

For example, Mysteel's survey indicated that as of October 14, coke producers in North China's Shanxi province still recorded an average loss of Yuan 167/t from selling wet-quenching quasi-first-grade metallurgical coke, compared to the prior week's Yuan 3/t margin.

This suggests the sixth price hike may not be the last, with coke producers likely to bet on the robust demand from steel mills to push for further increases. Yet the near-term trend for coke market will largely depend on whether the trend in steel prices allows mills to maintain high profit margins, market watchers said.

As of Monday, the national composite met coke price under Mysteel's assessment remained steady from Saturday (a substitute working day for China's National Day holiday) at Yuan 1,785/t including the 13% VAT.

The mood in China's portside coke market improved somewhat on the first trading day this week, which drove the bidding prices for portside coke from domestic coastal steel mills higher by Yuan 20/t. At Rizhao and Qingdao ports in Shandong province, coke stocks totalled 1.29 million tonnes as of Tuesday morning, down by 20,000 tonnes on week, Mysteel's tracking data show.

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