Chinese coke market maintains its weak tendency

The Chinese domestic metallurgical coke market has continued to be characterized by a weak tendency, with prices down in some regions. The inventory levels of coke held by most domestic coking enterprises have increased as demand for coke in the market is feeble. Thus, coking enterprises are increasingly anxious to step up their shipments. In addition, Chinese steel market prices have continued to decline, without any indication of a slackening of the downtrend for the time being. As a result, the Chinese domestic coke market will likely continue to be negatively affected by the situation in the domestic steel market.

During the past week, mainstream quotations of second grade metallurgical coke from large scale producers in Shanxi Province have been at RMB 1,820/mt ($277/mt), down RMB 30/mt ($5/mt) week on week, while quotations for first grade metallurgical coke in the province are standing at RMB 1,950-2,000/mt ($296-304/mt), unchanged week on week. Meanwhile, the purchase prices of Hebei Province-based mills are at RMB 1,950/mt ($296/mt) for second grade metallurgical coke, slightly down on week-on-week basis. The mainstream prices in the eastern China coke market are at RMB 2,150-2,200/mt ($327-334/mt), unchanged week on week, while prices in northeastern China are at RMB 2,000/mt ($304/mt), unchanged week on week. In addition, the mainstream prices of coking coal in the overall domestic market are at RMB 1,550-1,650/mt ($236-250/mt), also unchanged week on week.

In the past week, sales in the coke market in Hebei Province have slowed down, with decreases seen in prices. Market sources report that steel billet prices in Hebei Province have declined by an aggregate of RMB 230/mt ($35/mt) since the Chinese New Year holiday, while local steel mills have continued to purchase coke in limited quantities. As a result, local coking enterprises have started to face pressure from their rising coke inventories. Meanwhile, the mills exerted pressure for a reduction in coke prices. The coke prices in Hebei Province have declined by RMB 30/mt ($5/mt) week on week and the coke prices for delivery from Shanxi Province to Hebei Province have declined in general by RMB 30-50/mt ($4.6-7.6/mt) from the previous week.

In addition, demand in the coke market in Shanxi Province lacks strength and so inventories held by most local coking enterprises have risen. Looking at the current situation, the Chinese domestic coke market will likely continue to be characterized by weakness in the coming period.