Amid signs of a rally in coke prices propped up by continuous rises in steel prices and more active buying from steel mills, China's coking plants are mulling over plans to raise prices of the steelmaking ingredient
Chinese steel prices have picked up for two consecutive weeks since the start of July and rebar, wire rod, hot rolled coil and welded pipe showed marked growth in the week ended July 18, up 1.85%, 2.2%, 1.84% and 1.91% respectively from the previous week.
The rebound in steel prices was mainly driven by the government's release of environmental protection policies and continuous declines in steel inventories, analysts pointed out.
As of July 12, social steel inventories in China's major cities shrank 6 million tonnes to 16.14 million tonnes from a record high of over 22 million tonnes, marking 17th consecutive week of falls.
The upturn in steel prices have prompted Chinese steel mills to place more orders on coke, in response to which coking plants cranked up their operating rates.
As of July 12, the operating rates of independent coking plants with production capacity of over 2 million tonnes, 1-2 million tonnes and below 1 million tonnes were separately 85%, 71% and 68%, up 2%, 1% and 3% from the preceding week.
On the back of rising steel prices, coke prices also began to show signs of a rally recently. Prices of II grade metallurgical coke in Tangshan, Taiyuan and Liupanshui have held steady for more than half month.
Meanwhile, steel mills also intended to restock coke and under this circumstance, some coking plants were beginning to negotiate with steel mills about uplifting price by 50 yuan per tonne, but the request was bluntly refused by steel mills, which said that coal prices have yet to stabilize.
However, low inventories at steel mills and their restocking will help drive up coke prices in the short term, according to analysts.
Source www.cnchemicals.com/
China steel information centre and industry database