SHANGHAI, Oct. 18 (SMM) -- Coking coal prices have risen by more than RMB 100/mt since the start of September due to domestic coking coal shortages, coal mine accidents and increasing demand, while coke prices only rose by RMB 30-50/mt in September, so coke enterprises faced heavy cost pressures.
Most coke enterprises could only accept higher coking coal prices and tried to pass on price increases to steel mills, but significantly falling steel prices in late September depressed their price rise expectations. As a result, coke enterprises began to cut production.
Steel prices declined in September, which was rarely seen in past years, due mainly to domestic tightening liquidity and property control policy. Steelease monitoring shows that average prices for rebar fell by more than RMB 300/mt in September, while prices for hot-rolled products also dipped by about RMB 300/mt.
Coke enterprises are in a completely negative position in the bargaining process with steel mills due to excessive coke capacity, and steel mills would try to suppress the price of raw materials given significantly falling steel prices. However, coke enterprises have suffered huge losses due to high coking coal prices, and if steel mills significantly cut coke purchase prices, coke enterprises will choose large-scale production cuts and steel mills may face difficulties in purchasing coke in the future as a result.
In summary, coke prices are expected to remain stable in October, with prices in some regions possibly falling slightly.