Struggling to cope with low margins amid weak steel demand and high inventories, Chinese steelmakers have continued to search for options to decrease their production costs. This week, efforts to decrease metallurgical coke prices have begun to yield results. According to SteelOrbis’ data, coke prices in Tangshan have settled at RMB 3,060/mt ($456.7/mt) ex-warehouse, moving down by RMB 300/mt ($45/mt) compared to June 10. “Following the recent drop in coke prices, some mills proposed a further RMB 200/mt cut, which very possibly could be accepted. Moreover, another round of price cut is not excluded over the weekend, or early next week,” another source stated. Meanwhile, some mills have decided to lower their production. Specifically, in China’s steel production hub, Tangshan city, 56 of the 126 blast furnaces are said to have been shut down for maintenance. “Chinese mills' cash flows are very bad because they cannot move their inventory during the low-season, so it's natural they will delay plans to purchase more raw materials,” a market insider commented.
The buying activity in the export metallurgical market has dwindled to almost nothing. “This is a puzzle now to find a buyer, either in Europe, or in India,” a Chinese exporter stated. According to sources, ex-China 25-90mm of BF grade metallurgical coke (65/63% CSR) is currently available at $550/mt FOB, down $30/mt compared to the levels at the beginning of June. “There is no interest, so supposedly it's coming off in the coming days,” an Asian trader commented.
Meanwhile, following a few active weeks with high buying interest for ex-Russia low-priced coking coal, trading in the coal segment in China has waned to a certain extent. This week only a small lot of ex-Russia K10 coking coal has been booked at $290/mt CFR. The price is $11-17/mt lower than the levels in previous tenders. SteelOrbis has heard of the ongoing negotiations for ex-Yakutia coking coal, with the results remaining to be seen in the coming week. Offers of ex-North America premium hard coking coal have been heard at $470/mt CFR, which remains totally uncompetitive amid the aggressive offers from Russian suppliers.
As of Friday, June 24, coking coal prices at Dalian Commodity Exchange (DCE) have decreased by RMB 288.5/mt ($42/mt) compared to June 17, to RMB 2,288/mt ($342/mt). Meanwhile, coke futures prices have settled at RMB 3,000/mt ($448/mt), decreasing by RMB 263.5/mt ($39/mt) during the same period.
Meanwhile, at the Singapore Exchange (SGX), coking coal prices for June contracts have been settled at $382.67/mt, down $2.33/mt from the previous levels, while prices for July contracts recorded a bigger drop compared to the previous levels, down $7.67/mt to $346/mt.
$1 = RMB 6.70