Will the Decrease of Coke Prices Slow?

SHANGHAI, Nov 18 (SMM) - China Coking Industry Association held a market analysis meeting, joined by major coking companies from Shanxi, Shandong, Jiangsu, Hebei, Henan, Inner Mongolia, Shaanxi and other regions on November 16. The representatives of the participating coking companies reported on the operating conditions of their respective companies and regional market conditions.

Steel mills have reduced coke inventories and suppressed coke prices since the beginning of November, resulting in a sharp drop in coke prices. However, coking companies have generally suffered losses of 300-400 yuan/mt due to the relatively slow decline in coking coal prices. These plants cut the output to reduce losses. Meanwhile, most coking plants mainly consumed coking coal inventory, and some even suspended the purchase of coking coal. 

Tangshan starts Ⅱ emergency response of air pollution weather from November 16, steel production has been hit seriously, and mills’ demand for coke continued to remain low. Even if the China Coking Industry Association held a meeting to show the plight of the production of coking enterprises, it is also difficult for coke prices to stop falling and stabilise.

Coke prices will keep falling, but the decrease may slow down. Coke has undergone five rounds of price cuts, with a cumulative price cut of 1,000 yuan/mt as of November 18. The profits at mills have recovered and stood at 300-500 yuan/mt as the iron ore prices fell sharply. On the other hand, the production of coking plants were bearish. The output cut at some coking plants in Shanxi reached as much as 65%. If coke prices continue to fall sharply, most plants will reduce the output, which may break the current supply and demand situation of coal, coke and steel. The decline of coke prices is likely to be 120 yuan/mt.