CHINA COKE WRAP: Export prices fall on trading lull, domestic retreat

China’s coke export prices have continued to drop during late May to early June, with little trading activity heard amid a downtrend in the domestic market.

Offers for material with a coke strength after reaction (CSR) of 65% were heard at about $270-275 per tonne fob China over the past two weeks, with extreme cfr-based offers at an fob equivalent below $260 per tonne.

Metal Bulletin’s price assessment for coke cargoes with 65% CSR, 12.50% ash, in physical sizes of 30-90mm was $270-275 per tonne fob China on Tuesday June 6, down $10-15 per tonne from $280-290 per tonne two weeks earlier.

Prices remain on the downside, with indicative offer levels already about $265 per tonne fob, according to a Chinese export trader.

There is no tightness in China’s domestic coke supply at the moment, he said, with the pollution-controlling cokery production cuts already having been passed.

North China’s steel major Hesteel marked down its purchase price for first-grade coke with 0.70% sulfur by another 50 yuan ($7) per tonne at the start of the month, bringing it to a year-to-date low of 1,810 yuan ($266) per tonne, adding up to a fall of 200 yuan ($29) per tonne since the beginning of May.

In some other areas, this round of declines since May have totalled almost 300 yuan ($44) per tonne.

“Most Chinese coke producers hedge their production on the paper market. Once the futures prices drop 8-10% they would cut their export prices,” a buyer source in Europe said.

The most traded September coke futures contract on the Dalian Commodity Exchange touched a five-month low of 1,372 yuan ($202) per tonne this week on Tuesday, before recovering a bit to end at 1,417 yuan ($209) per tonne on Friday, down 11.60% from the closing price of 1,581 yuan ($233) per tonne on May 23.

Buyers of Chinese coke have been sidelined amid the price volatility.

“We are comparing Chinese coke offers with domestic prices. If there is immediate demand, we would buy small tonnages in the domestic market,” a buyer source in India told Metal Bulletin.

He added that, right now, China is not necessarily the country of choice when it comes to coke supplies.

Indian buyers may consider Russian, Ukrainian or Columbian coke, given their import duty on supplies from China and Australia, the Chinese trader said.

China exported 650,000 tonnes of coke in May, up 14% from 570,000 tonnes in May 2016, according to preliminary customs data released on Thursday.

Volumes totalled 3.40 million tonnes in the first five months, down 15% on the year.

There has been little activity heard from the country’s major coke export port of Tianjin.

Coke stockpiles at the north China port stayed unchanged from the previous week on Friday, at 1 million tonnes, according to local data provider Mysteel.

Inventories at eastern ports reached year-to-date highs at Rizhao and Qingdao, with Rizhao inventories up by 75,000 to 675,000 tonnes and Qingdao up 110,000 to 520,000 tonnes. At Lianyungang inventories rose by 25,000 tonnes to 135,000 tonnes.

The rise in inventories may indicate that exporters are preparing cargoes at those ports, according to a Chinese trader considering exporting through Qingdao.

[The 14th paragraph of this article was amended after publication to give the correct tonnage figures.]

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