Positive trend continues in China’s coke market

China's domestic coke market maintained its rising trend during the past week, with a minor climb observed in mills' purchase prices in some regions. Since the various coking associations have not yet announced their guideline coke prices for July, market players are uncertain as regards the likely increase margin for coke market prices in the month of July.

Last week, the Chinese coke market remained on a positive trend, with relatively low inventory levels seen at the various coking enterprises. At present, the mainstream quotations of second grade coke from large producers in Shanxi Province are unchanged week on week at the level of RMB 1,550/mt ($227/mt), while Hebei Province-based mills have raised their purchase prices to the range of RMB 1,650-1,750/mt ($242-256/mt) for second grade coke. Meanwhile, the mainstream prices of coking coal in the domestic market have remained in the range of RMB 1,150-1,200/mt ($168-176/mt).

Generally speaking, rising momentum still exists in China's domestic coke market for July. First of all, due to the tight availability of coking coal supplies, there is still a certain amount of room available for a further ascension of coking coal prices, which would be expected in turn to push up the production costs of coke. Moreover, as a result of the expansion of pig iron production, mills have been posting increased demand for coke in recent days. Finally, holding low stocks of both coking coal and coke, Chinese coking enterprises are producing at full capacity in most regions except Shanxi Province where production cuts continue to be implemented.

In addition, a certain correction has lately been recorded in the domestic finished steel market. The existing uncertainties in the finished steel market will continue to impact on local coke market prices in the future.

Finally, China's Ministry of Commerce has just issued its second coke export quota allocation list for 2009, with export quotas totaling 6.13 million mt.