Coke prices likely to peak soon

China’s rebounding coke prices will hit a peak soon, as supply is catching up with demand.

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“Grade II coke prices in Tangshan may reach 1,800 yuan ($287) per tonne, but for other regions, prices could peak at lower levels. This is because the price rebound is no longer sustainable now that the steel market has declined,” an industry source in Beijing said.

“And supply will not be as tight towards mid-December as coke producers are ramping up production on higher prices,” another industry analyst in the city said.

Coke prices in northern China increased by another 50-100 yuan per tonne from a week ago to 1,550-1,650 yuan per tonne on Monday November 26 on tighter supply.

The prices are about 25.5% higher than early October’s 1,250-1,300 yuan per tonne level.

“Coke producers are ramping up production after the previous cuts, but demand still exceeds supply,” an industry analyst in Beijing said.

“Besides, coke supply normally drops in winter and the tightened transporting capacities in northern China create an impact as well,” a trader in Beijing said.

The average utility rate is currently at 60-70% of capacity.