Chinese coke market retains positive performance

The Chinese coke market maintained its rising trend over the past week. Against the background of the rising production of crude steel in the domestic market, coke has been in short supply in various regions, leading to the continuous climb in coke prices.

Last week, China's domestic coke market still retained its positive performance, with a certain margin of increase observed in quotations in the Hebei market. At present, the mainstream quotations of second grade coke from large producers in Shanxi Province have remained unchanged at the level of RMB 1,550/mt ($227/mt), while Hebei Province-based producers again raised their ex-factory prices for second grade coke to the level of RMB 1,650/mt ($241/mt). Meanwhile, the prices of second grade coke in Huaibei, Anhui Province are still in the range of RMB 1,550-1,650/mt ($227-241/mt). Additionally, the market prices of coking coal have remained constant at RMB 1,100-1,200/mt ($162-176/mt).

The rally seen in finished steel prices in the Chinese domestic market since the beginning of May has helped stimulate crude steel production in the various regions, with many mills that had had previously halted or reduced production starting to resume operations, As a result, supplies in China's coke market have become tight again. In addition, given the eagerness of some mills to make purchases in order to supplement their low coke inventories, coking enterprises have availed of this opportunity to hike their prices. In Hebei, right after the price ascension of the previous week, it is heard that mills may be willing to accept another price increase of RMB 30/mt suggested by the coking enterprises.

For the coming period the price trend in China's coke market will principally depend on whether the domestic finished steel market can maintain its relatively high levels. Since the finished steel market is now characterized by high inventory and high supply pressure, a downtrend seems likely in the short term. In this context, it still remains to be seen whether China's coke market will retain its current positive performance.