Coke Prices Likely to Stabilise after the Second Round of Price Hike

SHANGHAI, Aug 17 (SMM) - Coking coal market: A water penetration accident occurred to a coal mine in Luliang city, Shanxi Province. The coal mine involved, with an approved production capacity of 1.2 million mt, has been closed. Recently, a number of online auctions have been finalised with premiums, and the inventory of coking coal held by coal mines has declined as well. However, the downstream players purchased on demand, and the prices of coal were stable as a whole, with prices of some varieties going up. 

Coke market: On the supply side, the mainstream steel mills in Shandong and Hebei provinces raised the purchasing prices by 200 yuan/mt for coke wet quenching, 220 yuan/mt for coke dry quenching, marking the success of the second round of coke price hike. The profit of coking enterprises has been gradually restored, and thus they are more willing to produce, with the supply likely to rise in the future.

On the demand side, the resumption of blast furnace production has been steadily progressing, and the production of pig iron continues to increase. The coke inventory held by some steel mills has dropped to a low level, and there is demand for restocking. But the terminal demand is not performing well, hence the traders are less animated at present. 

On the whole, after the second round of coke price hike, the profits of steel mills have been squeezed. Coupled with the fact that the performance of terminal demand has not been as good as expected, optimism over coke prices hence weakens. It is expected that coke prices are likely to remain stable in the near term.