Chinese prices of metallurgical coke could end their fall and rebound this month, Mysteel observes in its latest monthly outlook for the commodity, suggesting that recovering demand for coke from steel mills and potential constraints in coke supply could fuel an uptick.
The decrease in coke prices last month came after leading steel mills in North and East China cut their coke procurement prices by a total of Yuan 200-220/tonne ($27.8-30.6/t) after Chinese New Year holiday, as reported.
As of February 29, China’s national composite coke price under Mysteel’s assessment reached Yuan 2,100.5/t including the 13% VAT, down by a large Yuan 204.5/t from February 1.
However, the report indicated that the downward trend is likely to ease somewhat in March and that prices might even rebound mildly due to better market fundamentals.
March, traditionally a strong month for steel consumption in China, will see more building contractors resume work on real estate projects, which should boost steel demand and help to lift steel prices in the weeks ahead, the report said. In response, domestic steelmakers are likely to churn out more steel products in the near term, leading to rising demand for feed coke.
On the supply side, Mysteel forecasts a tightening in China’s coke availability as domestic coke makers are likely continue to scale back production amid severe financial losses.
As of February 29, the 30 coke makers surveyed by Mysteel suffered an average loss of Yuan 141/t when selling their met coke, some Yuan 34/t more compared with the previous week. This financial strain has prompted many coke plants to reduce production by about 30-50%, Mysteel Global noted.
In fact, since February, most coke manufacturers in China have cut their production, Mysteel data shows. Total coke output among the 230 Chinese independent coking plants that Mysteel tracks plummeted by 20,300 t/d from late January to average 496,300 t/d during February 22-28, the lowest level since mid-August 2022.
Supported by hopes for improved coke demand from steelmakers and the possibility that coke supply will decline, China’s coke prices are expected to enjoy a slight recovery for the remainder of this month, the report pointed out.
However, the extent of this recovery will be heavily influenced by the margins that steelmakers are enjoying, Mysteel pointed out. As of March 1, the Chinese BF steelmakers were still losing an average Yuan 174.4/t on their rebar sales, Mysteel’s database showed.
Written by Winnie Han
