China’s coke prices retain upward movement

In the context of the decreased inventories of both mills and coke producers, the Chinese coke market continued to climb up over the past week. Although the Shanxi Coking Industry Association decided against raising its guideline price of coke for June, deal prices between coking enterprises and mills have maintained their rising trend.

Remaining on its upward trend, China's domestic coke market was still characterized by strong demand in the past week. At present, the mainstream quotations of second grade coke from large producers in Shanxi Province are unchanged at the level of RMB 1,550/mt ($227/mt), while Hebei Province-based producers have raised their ex-factory prices for second grade coke to RMB 1,650-1,700/mt ($242-249/mt). Meanwhile, the prices of second grade coke in Huaibei, Anhui Province are up to the range of RMB 1,650-1,700/mt ($242-249/mt). Additionally, the market prices of coking coal have remained constant at the range of RMB 1,150-1,200/mt ($168-176/mt).

Following the differing margins of inventory decrease in the various regions, China's domestic coke market has been characterized by a certain amount of confusion over quotations in recent days. Last week, the Shanxi Coking Industry Association announced its guideline price of RMB 1,660/mt ($243/mt) for June, which showed no changed from the May level. According to the statement issued by the Shanxi Coking Industry Association, under the combined effects of the tight availability of coke supply and the high coking coal prices, many coking enterprises have concerns that the price increase of coke prices may cause coking coal prices to go up further, leading to a further ascension in coke production costs; meanwhile, the steel market still faces much pressure opposing its upward movement, as a result of which the coking industry is expected to suffer more losses. As a result, the Shanxi Coking Industry Association decided to maintain its guideline prices unchanged for June. Looking at the current situation, the Chinese mills are trying their best to curb the growth in the coke market; however, with the continuous increase in prices of iron ore and coke, the production costs of finished steel are expected to jump up sharply in the future.