Coke Prices May Rise Steadily in Near Term

SHANGHAI, Feb 28 (SMM) – The first round of coke price hike has been realised, and the coke prices are likely to rise steadily in the short term.

Iron Ore:

The iron ore futures prices fluctuated widely last Friday. The most traded SHFE iron ore contract closed at 680.5 yuan/mt, down 3.13% in the intraday trading. The spot quotations dropped by 10 yuan/mt from the previous day on Friday morning, and the quotations fell further by 5-10 yuan/mt intraday as the futures prices went down. The traders reduced shipments and held firm to the quotations, while the steel mills were wait-and-see. The spot transactions at ports were modest. The PB fines in Shandong traded at 851-865 yuan/mt, down 0-10 yuan/mt from the previous day. The super special fines in Shandong traded at 508-525 yuan/mt, a drop of 15-30 yuan/mt from Thursday, and the super special fines in Tanshang traded at 865 yuan/mt, down 5 yuan/mt from the previous day. The stocks at 35 ports tracked by SMM totalled 154.07 million mt as of February 25, down 1.32 million mt from the previous week. The daily average shipment from the 35 ports increased 632,000 mt on a weekly basis to 2.81 million mt last week. The port inventory fell sharply due to the slightly lower arrivals at ports and the increased purchases of steel mills. The steel mills are expected to increase their procurements amid alleviated production restrictions in north China, so the port inventory may drop further, which may support the iron ore prices to rebound this week.

Coke:

On the supply side, the first round of coke price hike was realised as the large-sized steel mills in Hebei and Shandong accepted the price increase by 200 yuan/mt. The coke supply was tight amid growing downstream demand, and some coking companies were expecting the coke prices to rise further.

On the demand side, the steel mills were more active in coke procurements, and some traders were also purchasing coke, so some steel mills saw low arrivals of resources.

The coke futures prices dropped across the board due to the governmental intervention. However, the actual sales of coke was robust, the coke inventory was low, and the online sales prices were high. As such, the coking coal spot quotations are expected to rise further. The coke prices may move upward in the near term.

Rebar

Futures and spot prices of rebar dropped due to the domestic policy control, Russia-Ukraine conflicts, and slow recovery of end demand. The operating rates of EAF increased sharply, and some blast furnaces in north China were resumed, bringing about the increase in rebar output. The steel mills in north China may face production restriction again due to the Paralympic Games, and the EAF output will increase limitedly. Hence the rebar output may not rise significantly this week. The end demand was seriously affected by the weather, and the falling prices also suppressed the purchases, so the overall demand was recovering slowly. Later, the end demand is expected rebound as the weather becomes warmer. The rebar prices in most regions rebounded to the pre-CNY level last week, and the steel traders held firm to the prices. The EAF mills also had strong cost support. The spot prices are expected to remain rangebound in the short term. The floating range of rebar prices is expected to be -100 - 150 yuan/mt this week.

HRC

The HRC prices dropped across most cities in China last Friday, and the prices in east China fell more significantly. The news that the government will define a reasonable range for coal prices caused the plunge in coal prices, and then the prices rebounded rapidly after the market heard that the data was mistaken. The speculative demand increased to some extent after the prices rose, while the actual transactions were modest. The upward room for HRC output is limited in the near term due to the upcoming production restriction. The demand is still recovering, and the raw material prices fluctuate frequently. The HRC prices are expected to fluctuate within a wide range.