Chinese coke market remains soft due to poor demand

Still characterized by overall sluggishness, China's domestic coke market continued its minor declining movement during the past week. As most domestic mills have lowered their purchase prices and put restrictions on their purchasing volumes, the trading volume in the Chinese coke market has registered a remarkable shrinkage due to the slump in market demand.

China's domestic coke market posted an overall bearish trading performance in the past week, with a slight decline observed in general market prices. 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 reduced their purchase prices to RMB 1,700-1,750/mt ($249-256/mt) for second grade coke. Meanwhile, coke prices in Pingdingshan, Henan Province are at RMB 1,700/mt ($249/mt), with the mainstream prices in the eastern coke market down by RMB 50/mt ($7/mt) week on week to 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).

In the context of the continuing weakness of the domestic finished steel market and of the relatively high steel inventories in the various regions, most mills and traders are not very optimistic as regards the future trend of the Chinese steel market. Consequently, various mills have recently made successive downward adjustments to their purchase prices for coke and other raw materials so as to cut their production costs. In addition, most Chinese steel mills currently have relatively high coke inventories; for example, Hebei Province-bases mills would generally be able to sustain 30 days of production with their current coke inventories. As a result, most mills have relaxed their coke purchasing activities, and the coke market in China has recently started to see a certain degree of stagnancy in some regions. Meanwhile, considering the insufficient market demand, coking industry associations in most regions have asked coking enterprises to reduce their output levels. For the purpose of maintaining coke prices stable, Shanxi Coking Industry Association has urged local coke producers to cut their outputs to 30-40 percent of normal capacity, while Hebei Coking Industry Association has called for production to be reduced by 30-40 percent.