SHANGHAI, Oct 28 (SMM) - Some coal companies in Shanxi suspended production for a while amid torrential rain in early October. Yulin City held a meeting of coal supply guarantee for Q4, demanding a reduction in the prices of thermal coal. And thermal coal prices began to fall; some coking companies in Hebei and Shanxi raised the prices of coke by 200 yuan/mt in late October, and there is currently no response from mainstream steel mills.
On the supply side: Coking enterprises in Shanxi generally carry out staggered production, cutting the output of about 15%-40%. Among them, Linfen and Xiaoyi have been subject to strict restrictions, and the regional supply of coke has decreased. Shandong's production restrictions remain 70%-80% and did not loosen. Coking plants in Hebei are required to cut 20-30% of output amid environmental protection inspections.
On the demand side, the restrictions in Hebei and Jiangsu intensified; Mills in Linfen implement staggered production in autumn and winter, so do Hebei due to the Winter Olympics; 12 blast furnaces in Tangshan were overhauled and the demand for coke fell sharply.
On the raw material: Coal output has increased amid the supply guarantee policy. In addition, thermal coal has been under policy control recently, and the prices have been lowered. The quotations of some coking coal performers have been lowered. However, Shanxi coal mines mainly focus on thermal coal supply, the supply of coking coal is still tight, supporting coking coal prices.
The supply and demand of coke is under tight balance. The road transportation problem in Shanxi has basically been solved. The coking enterprises basically have no coke inventory, and the coke inventory at mills is in a reasonable range, which can basically maintain two weeks of consumption. Mills hardly accepted the increase of coke prices by 200 yuan/mt amid muted demand, sharp decline of steel prices and profits. In addition, mills in Hebei are likely to cut more output in November, resulting in a decrease in demand for coke. Coke prices are expected to weaken.
