CHINA COKE WRAP: Uptick expected after low-price trades

Expectations have increased for China’s coke prices to bounce up, although some export deals were reported at lower levels in the past week.

Metal Bulletin’s assessment of export prices for Chinese coke with 65% coke strength after reaction (CSR), 12.5% ash, 30-90mm, was $300-315 per tonne fob China for the week ended Tuesday April 24.

This widened from a range of $305-310 per tonne fob in the preceding week, and was $10-15 lower than the assessment of $315-325 per tonne fob a fortnight earlier.

While a 20,000-tonne early-May cargo of 65% CSR material was heard sold at around $320 per tonne fob China to Japan earlier this month, more recent transactions of May shipments involving 62% CSR products to the same destination were reported at $280-290 per tonne fob.

Such prices look unprofitable and unrepeatable, however, because the market is bottoming out. This is likely to result in higher costs to secure supply in the coming weeks, sources said.

“Prices for 65% CSR coke had not fallen much in the domestic market [compared with lower grades], and now traders have raised offers by 50 yuan per tonne so that it could cost 1,950 yuan ($308.50) per tonne at seaports,” a trader in Beijing said.

Export offers made below $315 per tonne fob for such materials are unrealistic, he added.

Although cokeries in the country are yet to announce any price hike, they do have such plans for the future, according to sources.

The sentimental upturn was mainly triggered by the recent round of pollution inspections in the country’s biggest coke producing province, Shanxi, which has led to production cuts of 20-50% at cokeries in different areas, some sources said.

Gains in futures and steel markets have also shored up market confidence.

The most-traded September coke contract on the Dalian Commodity Exchange closed at 1,916 yuan per tonne at 3pm on Thursday, up 10.7% from the close of 1,731.50 yuan per tonne two weeks earlier.

East China’s rebar prices also rose over 6% in the same period to 3,860-3,900 yuan per tonne on Thursday April 26.

In the meantime, however, coking coal prices have been retreating both in China and in the seaborne market, further denting the cost support for coke.

Metal Bulletin’s weekly assessment of domestic prices for hard coking coal in Shanxi delivered to Tangshan stood at 1,350-1,750 yuan per tonne last Friday April 20, down 150 yuan per tonne in a month’s time.

Metal Bulletin’s fob Australia premium hard coking coal index dropped 9.5% in the past fortnight to $172.56 per tonne on Thursday.

While a trader in India told Metal Bulletin last week he would bid at $300 per tonne fob China for 65% Fe coke, which is at par with the prices of local materials, cheaper seaborne coking coal could now lead to lower costs for domestic supply and thus reduce the need to take Chinese cargoes.

However, inquiries for Chinese coke became more active in general recently amid the stabilizing prices, a cokery source in Shanxi said.

India and Brazil ranked the top two destinations of China’s coke exports (including semi-coke) in March, accounting for 173,122 tonnes and 155,649 tonnes respectively, according to the Chinese customs data.

Malaysia, Algeria and Vietnam followed, taking 135,177 tonnes, 100,060 tonnes and 67,739 tonnes, respectively.

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