SHANGHAI, Jun. 2 (SMM) -- According to China Customs, domestic coke exports in April were 41,000 mt, down 61,000 mt compared to the previous month or 60.2%, and down 91.6% YoY. Aggregated exports from January through April were 289,000 mt, compared to 1.681 million mt the same period last year, down 82.8% YoY.
Coke exports should remain low given high tax, which is strongly opposed by coking enterprises, importers and exporters. But China does not encourage or rein in exports of high polluting and high energy consuming products. The results were unfavorable for China as coke export tax is considered illegal from international rules, and China will likely lower coke export tax. Domestic coking enterprises are in significant losses given current unit price, so coke output is unsteady, with the small export volume by large enterprises made to maintain oversea strategic customers. But export quotas still outstrip real exports.
China's coke industry is constrained by rising output and capacity surplus. China's real coke output in 2011 was 420 million mt, while coke capacity was 560 million mt/yr, with nearly 25% of coke capacity idle. Independent coking enterprises' pricing rights will weaken since steel plants are enhancing self-owned coke capacity construction. China's coke output in 1Q 2012 was 107.772 million mt, up 6.5% YoY. In this context, coke market should remain in supply surplus, with prices moving at low levels.
Coke export prices hit USD 453/mt in April 2012, with unit price down USD 7/mt MoM. China coke exports and prices fell in April due to the traditional low demand period for coke. Besides, export average price fell due to low export volume. What's more, coke exporters were unwilling to move goods due to low profit margins.
It used to be the seasonal peak demand period for coke in 2Q, but international economic situation and domestic export tax will signifincalty constrain coke exports. Steelease believes coke exports in 2Q should hover around 500,000 mt, with export prices between USD 430-440/mt.