With China's economy having unexpectedly faltered in July, with factory and retail activity squeezed by Beijing's Covid policy and the property crisis, China's domestic demand for construction steel is unlikely to soar in the near future. Nevertheless, following the recent gains in sales margins, Chinese steelmakers have continued to accept higher prices when securing feedstock, in particular, coking coal and metallurgical coke.
Accordingly, following a booking at $212.8/mt CFR China late last week, at the beginning of the current week Russia's Mechel has managed already to get $220.10/mt CFR China in its sale of a K10 coking coal cargo, for prompt laycan to China. Furthermore, SteelOrbis has heard of a booking of ex-Russia PCI at $182/mt CFR China late last week. Meanwhile, an offer for ex-US Blue Creek No.7 at $330/mt CFR appears to have remained out of buyers’ range of interest. Apart from the price unattractiveness compared to ex-Russia offers, delivery terms are also not contributing to transactions. Ex-Canada premium mid-volatility hard coking coal offers have been heard at $288/mt CFR, for August laycan, while counter-bids have been voiced at $260-270/mt CFR.
Given recent market developments, Chinese producers of metallurgical coke have succeeded in implementing a second round of price hikes. Accordingly, first-grade coke prices in China have increased by RMB 220/mt ($32.4/mt) compared to the previous levels. “The situation is becoming quite controversial. Today, prices in the physical market have dropped, steel mills still have no firm margins, and so I am not sure a third round of hikes [in met coke prices] is possible,” a China-based trader stated, commenting on the future outlook.
Average first-grade coke prices in China’s main markets are presented in the following table:
Prices of first-grade coke in local markets in China - Aug 17
|
Product Name |
Specification |
Place of Origin |
Price（RMB/mt） |
Price ($/mt) |
Weekly Change（RMB/mt） |
Weekly Change（$/mt） |
|
Coke |
First grade （A<13.0,S<0.75,CSR>65.0） |
Hancheng,Shaanxi |
2940 |
433 |
+220.0 |
+32.4 |
|
Zibo ,Shandong |
3080 |
454 |
+220.0 |
+32.4 |
||
|
Pingdingshan,Henan |
2850 |
420 |
+220.0 |
+32.4 |
||
|
Tangshan |
2930 |
432 |
+220.0 |
+32.4 |
||
|
Huaibei,Anhui |
2950 |
435 |
+220.0 |
+32.4 |
||
|
Average |
2950 |
435 |
+220.0 |
+32.4 |
Meanwhile, on Wednesday August 17, futures prices at Dalian Commodity Exchange (DCE) plummeted. Accordingly, coking coal prices have settled at RMB 2,130/mt ($314/mt), down RMB 66/mt ($10/mt) from Tuesday, August 16. Meanwhile, coke futures prices have dropped by RMB 143.5/mt ($21/mt) to RMB 2,856.5/mt ($421/mt) in the given period.
$1 = RMB 6.7813