Early this week, steel mills in China’s key steelmaking hubs in the country’s north, east and northeast regions notified their coke suppliers they are cutting their procurement prices by another Yuan 200/tonne ($31/t), for the fifth time so far in November all by the same degree, citing the continuing heavy cost pressure they face against the continuing decline of finished steel prices, according to sources.
Effective November 16, Rizhao Steel in East China’s Shandong, for example, is paying Yuan 3,330/t on delivery including the 13% VAT for dry-quenched coke with a maximum of 13% ash, 0.7% sulphur and at least 60% CSR, Mysteel heard. With the latest adjustment, Rizhao has cut its coke prices by Yuan 1,000/t in total this month.
As of November 16, Mysteel’s national composite coke price had plunged Yuan 327.4/t on week to Yuan 3,479.6/t including the 13% VAT, hitting a low since September 1. By Tuesday too, China’s finished steel prices had continued declining. The average price of HRB400E 20mm dia rebar had fallen by Yuan 215/t on week to Yuan 4,735/t including the 13% VAT, the lowest since March 19.
“We have quite sufficient coke stocks at hand, so we are in no hurry to procure,” a steelmaking source in East China said. “Many steel mills have reduced operations, and for them, maintaining high coke stocks can be risky. They need to have adequate dust control and fireproofing measures as required, if they hold large stocks of coke at hand,” he explained. A sixth cut in coke prices is on the way, he predicted.
The tumble in coke prices has triggered worries among the country’s coke makers and forced some makers to further slow production and reduce or even stop procuring coking coal, according to a Shanghai-based industry source.
By November 11, the 30 Chinese independent coking plants in Mysteel’s survey had been losing an average of Yuan 34 for every tonne they sold. With the recent adjustments, their losses may keep widening, Mysteel Global noted.
“Coke prices are falling too fast, and the decline in coking coal prices over the same period has not helped compensate the makers. So many are struggling with an over Yuan 200/t loss,” said a Shanghai-based analyst. “Some coke makers are still consuming the coal they bought from miners earlier when prices were high, so it’s hard for them to mitigate the cost pressure within a short period,” he added.
Source: Mysteel
The Coal Hub is an online platform for sharing analysis and information about the global coal market more info
Sign up to receive our weekly newsletter (each Monday) with new coal market reports, presentations & analysis.
By signing up, I agree to our TOS and Privacy Policy.
© 2020 TheCoalHub | All Rights Reserved
