SHANGHAI, Jun 17 (SMM) – Due to the weak market demand and falling steel prices, some steel companies in Tangshan began to overhaul and reduce operations of their blast furnaces. Analysts said that it is difficult for coke prices to record a third round of hike. If the end demand does not recover, coke prices may gradually weaken.
Coke prices saw two rounds of increase this month, driven by optimism that downstream demand may recover with the diminishing impact of the pandemic. Coke prices have gained 300 yuan/mt, and the prices of quasi first-grade coke in Tangshan reached 3,410 yuan/mt. The price of coking coal also continued to rise. The prices of coking coal in Anze, Shanxi reached 3,200 yuan/mt, close to the previous high of 3,500 yuan/mt.
However, the coking coal and coke prices in the futures market suddenly took a nosedive yesterday, causing the market to be caught off guard. The prices of coking coal and coke futures contracts have fallen by more than 10% from this month's high. The rapid decline in the price of coking coal and coke futures contracts also represents a cooling of market sentiment. Wang Xiangling, an analyst at GF Futures, said that the reasons for this decline are output cuts by steel mills in Tangshan, expectations for resumprion of customs clearance of Australian coal, and weak steel demand.
Due to losses, steel mills in Tangshan and surrounding areas have put three more blast furnaces under maintenance. It is estimated that from the end of June to July, a total of 10 blast furnaces in seven steel companies in Tangshan and surrounding areas are scheduled to be put under maintenance.
The price difference between domestic and imported coking coal has shrunk to less than 100 yuan/mt, hence the import window may open.