SHANGHAI, Dec 8 (SMM) - Some coking companies in Inner Mongolia hiked coke prices by 100 – 120 yuan/mt as of Monday December 6? The question now lies in is it time for coke prices to reverse from eight consecutive rounds of decline?

Downstream demand for coke is the leading factor that influences the moves of coke prices. According to SMM research, the average operating rate of blast furnaces stood at 79.1% last week, up 0.2 percentage point from a week earlier. The demand for coke picked up as a whole partly because the steel mills’ profits were relatively lucrative recently after steel prices rebounded, hence they began to build up stocks for the winter. A large domestic steel mill also resumed the production of blast furnaces to some extent. However, the overall demand was still at a low level amid the routine stagger production in winter. And the production is likely to be restricted further as the Winter Olympics are approaching. In other words, the demand outlook for coke is not quite optimistic.

On the supply side, the average operating rate of coking companies in Shanxi stood at 71.8% last week, up 0.6 percentage point on the week, pushing up the coke supply. The in-plant coke inventory at coking companies also dropped palpably, which dropped by 106,000 mt to 426,000 mt in Shanxi from a level of 532,000 mt, indicating constant purchase by downstream steel mills.

SMM believes that the overall demand for coke is unlikely to see significant increase as the demand from steel mills was low on the whole, and the mills have been building up their stocks from some time. Meanwhile, the operating rates of coking companies were on the rise, lifting the supply of coke. Therefore, the coke prices could not even stabilise for a considerable period of time. The short-term stability in coke prices was only the result of the on-going restocking process of steel mills as well as the consecutive large declines in prices.