Chinese coke market still on the rise

As a result of the upward adjustments of guideline coke prices for July made by various coking associations in the country, China's domestic coke market has registered a continuous rise over the past week. Meanwhile, finished steel prices have been fluctuating at high levels and are expected to impact on the domestic coke market in the future.

So far in the month of July, the Chinese coke market has posted an overall increase in the various regions. At present, the mainstream quotations of second grade coke from large producers in Shanxi Province are up by RMB 50/mt ($7/mt) to the level of RMB 1,600/mt ($234/mt), while Hebei Province-based mills have raised their purchase prices to the range of RMB 1,700-1,750/mt ($249-256/mt) for second grade coke, with coke prices in eastern China climbing to RMB 1,750-1,800/mt ($256-264/mt). Meanwhile, the mainstream prices of coking coal in the domestic market have risen to the range of RMB 1,200-1,250/mt ($176-183/mt).

Coking associations in various regions in China have issued their guideline coke prices for July in recent days. On July 7, Shanxi Coking Industry Association raised its guideline coke price by RMB 60/mt ($9/mt) from June levels to RMB 1,710/mt ($250/mt) for July. Meanwhile, considering the high prices of coking coal, Hebei Coking Industry Association made an overall upward adjustment of RMB 60/mt ($9/mt) to its July coke prices. After the change, Hebei Coking Industry Association's July guideline price for second grade coke is now RMB 1,700/mt ($249/mt), while its guideline price of first grade coke is RMB 1,780/mt ($261/mt).

Against the background of the relatively high price levels in China's domestic finished steel market, steel mills in various regions have continued to increase their production outputs, thus driving up demand for both coke and coking coal. At the same time, since domestic coking coal prices have been rising steadily against the tight availability of market supply, various coking enterprises have raised their prices continuously, leading to the ascending price levels in the domestic coke market. Looking at the current finished steel market, the present prices have already reached relatively high levels, and the market is now coming under increasing pressure to undergo a correction. Finished steel prices in some regional markets have recently shown a certain slowdown in their upward movement compared with the previous period. If the finished steel market in China sees a correction in the coming days, local coking enterprises will be impacted directly. At present, only Shanxi-based coking enterprises are still operating at reduced capacity, while those in the other regions are all producing at full capacity. Overall, China's domestic coke market is expected to continue to face a certain degree of pressure in the coming period.