CHINA COKE WRAP: Prices rebound on cokery suspensions, better mill profitability

China’s domestic and export coke prices gained some upward momentum over the past week thanks to higher mill margins and continued measures intended to reduce pollution.

Metal Bulletin’s assessment of export prices for Chinese coke with 65% coke strength after reaction (CSR), 12.5% ash, 30-90mm, was $320-330 per tonne fob China for the week ended Tuesday May 8.

This was up by $5 per tonne from $315-325 per tonne fob in the preceding week, and $10-15 per tonne higher than the assessment of $300-315 per tonne fob a fortnight earlier.

Offers for such materials have been raised to at least $320 per tonne fob and a deal was heard agreed recently at $330 per tonne fob.

Those figures were based on a stronger domestic market this month, with a first round of price rises implemented and a second round starting to gain acceptance.

North China’s Hesteel has raised its coke purchase price for the first time this year, by 50 yuan per tonne from May 9. It is now paying 1,920 yuan ($302) per tonne for materials with 65% CSR, delivered to its facilities. The mill had made decreases totaling 600 yuan per tonne during January-April.

East China’s Laigang Yongfeng Steel has also increased its purchase prices for the steelmaking raw material by 50 yuan per tonne, from the same day. This followed an earlier rise by the same amount on May 1.

Those purchase price rises happened immediately after cokeries were heard to be proposing higher sales prices, an indication that steelmakers are able to absorb higher costs due to an improvement in their profitability.

East China’s rebar prices rose by more than 600 yuan per tonne to 4,060-4,100 yuan ($638-644) per tonne at the end of last week from 3,410-3,500 yuan per tonne on March 26, although they have retreated this week to 3,950-4,000 yuan per tonne on Wednesday.

On the supply side, coke production remains subject to disruptions resulting from requirements to reduce emissions set by local authorities.

Although the severity of the production cuts at cokeries in the main producing area of Shanxi has eased a bit, coke producers with total capacity for almost 15 million tonnes per year in the eastern city of Xuzhou were ordered to completely suspend operations this week after a previous half-stoppage, and without a planned date for resumption, sources told Metal Bulletin.

These factors could support another one or two rounds of coke price increases across the country, they added.

Seaborne coking coal prices have also been rebounding in the past two weeks. Metal Bulletin’s fob Australia premium hard coking coal index advanced to $188.73 per tonne on May 9. This was up by $16.17 per tonne or 9.4% from a nine-month low of $172.56 per tonne on April 26-27.

With rises in the costs necessary to secure coke supplies, export offer prices could soon reach $350 per tonne fob China, which would not be affordable for some overseas buyers, a trader in Shanghai said.

China exported 813,000 tonnes of coke and semi coke in April, up by 9.9% year-on-year but down by 13.5% month-on-month, according to preliminary data from Chinese customs. In the first four months of 2018, shipment volumes rose by 12.3% year-on-year to 3.09 million tonnes.