Chinese coke market shows little change week on week

Prices in China's domestic coke market saw little change over the past week against a background of sluggish trading activity. The Shanxi Coking Industry Association lately announced its guidelines for April, urging coking enterprises to maintain their cuts or halts to output operations, and recommending a reduction of RMB 100/mt ($15/mt) for coke prices in April. Based on the current situation, the Chinese coke market is likely to slide further down.

Last week, the Chinese coke market still remained at the same price levels as in the previous week, in a context of the continuing sluggishness of the trading performance. At present, the mainstream quotations of second grade coke from large producers in Shanxi Province are in the range of RMB 1,400-1,500/mt ($206-220/mt), while the prices of coke in Huaibei, Anhui Province are around RMB 1,500-1,600/mt ($220-234/mt). Meanwhile, the purchase prices of second grade coke announced by mills in Tangshan are at the level of RMB 1,600/mt ($234/mt). In addition, the ex-factory prices of coking coal are still high, at RMB 1,150-1,200/mt ($168-176/mt).

The Shanxi Coking Industry Association has issued its April guideline prices for coke, with the price of first grade coke down from RMB 1,700/mt ($249/mt) to RMB 1,600/mt ($234/mt). Meanwhile, the association has also urged local coking enterprises to continue their production cuts, advising that overall output should be kept at around 60-70 percent of total capacity. If necessary, the association recommends, producers should also halt their operations so as to reduce inventories and losses as much as possible.

Based on the current situation, although the domestic market quotations of coke remain at a relatively high level, the actual deal prices in some regions have already dropped below RMB 1,400/mt ($206/mt). Since the coke prices are not low enough to meet mills' expectations, the mills are continuing to restrict coke purchases so as to put more pressure on prices. In addition, the Chinese coking coal market has also showed a certain softness with the coming of April. Following the large-scale production cuts or halts of the coking enterprises, domestic coking coal prices are also expected to go down, thus offering room for further downward movement in China's domestic coke market in the near future.