CHINA COKE WRAP: Quick price retreat not enough for export markets
Price falls in China’s domestic metallurgical coke market have been seen at different rates across the country’s regions this week but have failed to ignite much interest in exports.
A cargo for November delivery with a coke strength after reaction (CSR) of 64% was traded to Japan at $345 per tonne fob China last week, while similar material was being offered at $330 per tonne fob as of Friday October 27, according to market sources.
One Chinese trader even indicated an offer price of $310 per tonne fob.
Metal Bulletin’s price assessment for coke shipments with 65% CSR, 12.50% ash, and in physical sizes of 30-90mm, was $330-345 per tonne fob on October 24.
This price range had widened downward from $340-345 per tonne fob a week earlier, and was down by $15-25 per tonne from $355-360 per tonne fob a fortnight ago.
China’s domestic coke prices have accelerated downward in the past two weeks, with purchasing mills squeezing the cost of the blast furnace fuel.
Rizhao Iron & Steel in Eastern China slashed its coke purchase prices four times in the period October 17-25, by a total of 300 yuan per tonne. Since late September, it has reduced the price seven times, by a combined total of 500 yuan per tonne.
For material delivered to its facilities, the steelmaker is now paying 1,850 yuan ($279) per tonne for materials with 58% CSR and 0.65% sulphur, and 1,800 yuan per tonne for coke with 57% CSR and 0.70% sulphur.
Northern China’s Hesteel has also been lowering it purchase prices for metallurgical coke, but at a different pace. It has reduced the price four times this month, by a total of 320-420 yuan per tonne.
The mill is now paying 2,100 yuan per tonne for materials with 65% CSR, and 1,890 yuan per tonne for those that contain 1% sulphur, delivered to its facilities.
Hesteel’s milder price cuts for 65% CSR products reflect the relative tightness of supply for such high grades, a trader in Beijing said. For lower-CSR and higher-sulphur materials, however, inventory levels are quite high, he added.
And stockpiles could build up further because the 30-50% production cuts required by the government at cokeries in Beijing, Tianjin and 26 other cities in four provinces nearby, since October 1, have largely not been fully implemented, while restrictions on blast furnaces have been stronger than expected.
Apart from the imposed cuts of at least 50% at Handan in Hebei and Anyang in Henan, blast furnaces in the steelmaking hub of Tangshan were reported to have lowered their production rates or even hot-idled their operations this week, due to a lack of sintered ore.
Participants also attributed the blast-furnace restrictions to the fallout from the 19th National Congress of the Communist Party of China. When that ended on Tuesday, some resumption of production was heard.
China’s most-traded January coke futures contract on the Dalian Commodity Exchange closed at 1,724.50 yuan per tonne on Friday, down by 8.8% from a fortnight earlier.
Lower prices for Chinese coke may have raised interest among some overseas buyers, but not to the extent that might have been hoped.
“We weren’t looking for cargoes from China amid the falling prices and the uncertainties brought about by the National Congress. The timing was not right,” a source in Japan said.
India was not buying either because its local materials were cheaper, a trader in Singapore said.
“Domestic coke prices in India have dropped by $35 per tonne since mid-September, following Australian coking coal losses,” a source in India told Metal Bulletin.
Metal Bulletin’s fob Australia Premium Hard Coking Coal Index was $179.77 per tonne on Friday, down by $28.58 per tonne from $208.35 per tonne on August 30.
“For Indian buyers, ideal costs would be $310-320 [per tonne] cfr India, which would be on a par with domestic prices,” the source said.
China exported 467,537 tonnes of coke products in September, down by 23.9% year-on-year, according to the country’s customs data. January-September exports totalled 5.75 million tonnes, down by 22.5% from a year earlier.
India remained the principal destination for Chinese coke last month, with shipments totalling 138,670 tonnes.
Mexico and Vietnam came next, accounting for 53,856 tonnes and 49,922 tonnes, respectively.