Some Chinese steel mills initiate 7th coke price cut

Mysteel Global: Citing prolonged losses from selling finished steel, on 28 August some steelmakers in North China's Hebei province and East China's Shandong province initiated a new round of coke procurement price cut by another yuan 50-55/tonne ($7-7.3/t) effective from 29 August, according to market sources.

On Wednesday, the national composite coke price under Mysteel's assessment remained largely stable at yuan 1,651.4/t including the 13% VAT, only down by a tiny yuan 1.7/t on day.

No similar notices have been heard from the leading steel mills in Hebei and Shandong as of Thursday morning, but they are expected to join the rank today when they issue new tenders seeking additional coke cargoes, market sources disclosed. If the new price cuts take effect this week, it will mark the seventh round of reductions since late July, meaning an accumulative decrease of yuan 350-385/t for domestic coke prices.

The persistent downtrend was mainly driven by Chinese steelmakers' urgent need to mitigate their severe losses by scaling back steel production and curtailing coke procurement costs. Meanwhile, slower operations have also made many mills less interested in building up their coke stocks, Mysteel noted.

Despite some signs of strengthening steel prices this week, domestic steel mills are still experiencing deep losses on selling finished steel. Mysteel's weekly survey showed that ten leading steel mills in Tangshan city of Hebei still reported an average loss of yuan 190/t as of 28 August, though the loss reduced by yuan 94/t on week.

The near-term direction of coke market will still largely hinges on the sustainability of steel price rebounds recently, which could steer mills' production pace as well as their appetite for feed materials, a Shanghai-based analyst remarked. Mysteel learned that some participants are optimistic that coke prices may bottom out after the seventh price reduction, while some are still cautiously watching steel price trend.

At Rizhao and Qingdao ports in Shandong province, coke stocks totalled 1.39 million tonnes (mnt) by Wednesday, down by 30,000 t on week, Mysteel's tracking data showed.

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