Chinese coke market maintains slight declining trend

Against background of the continuing sluggishness of the coke market in China, eastern and northern-based mills in the country again announced certain reductions to their purchase prices for coke during the past week. Looking at the current situation, the domestic coke market is expected to remain at low levels due to bearish market demand, with an improvement unlikely in the short term.

China's domestic coke market retained its slight decline in the past week. At present, the mainstream quotations of second grade coke from large producers in Shanxi Province have remained unchanged at the level of RMB 1,650/mt ($242/mt), while Hebei Province-based mills have again reduced their purchase prices to RMB 1,650-1,700/mt ($242-249/mt) for second grade coke. Meanwhile, coke prices in Pingdingshan, Henan Province are at RMB 1,650-1,700/mt ($242-249/mt), with the mainstream prices in the eastern coke market in the range of RMB 1,800-1,850/mt ($264-278/mt). In addition, the mainstream prices of coking coal in the domestic market have remained in the range of RMB 1,250-1,300/mt ($183-190/mt).

Given the continuing bearishness in the domestic finished steel market, the Chinese coke market has remained quite soft in recent days. In the wake of the previous sharp slump of finished steel prices, various mills have made frequent downward adjustments to their ex-factory prices, but only to record stagnant sales performances. In the context of weakening market confidence, the steel market is expected to move further down in the month of September according to many players. With relatively high coke inventories in hand, most mills are not under any pressure to make purchases of coke, leading to stagnancy of market trading. Moreover, coke enterprises in eastern China and Hebei Province had to lower their prices by RMB 50-100/mt so as to stimulate sales, but only to observe flat levels of trading activity. According to the current situation, an improvement in demand is unlikely for the domestic coke market in the short term without the rebound of finished steel prices. In addition, due to the forthcoming National Day celebration as well as the mine accident in Pingdingshan, various coal mines have been urged to strengthen their safety inspections, which may affect the future supply of coal, thus providing support for coke prices to a certain extent.