Some metallurgical coke producers in China proposed to further raise coke prices by 100-110 yuan/t for the third round, in response to elevating coking coal prices and firm purchasing demand from steelmakers.

 

Coking plants have been grappling with fast-rising coking coal prices, which are still on the rise and almost on par with coke prices, primarily due to supply shortfall, yet causing severe losses to coke makers.

 

The CCI Index for Shanxi low-sulfur primary coking coal surged by 280 yuan/t from the month prior to 2,510 yuan/t on December 1, ex-washplant with VAT, the highest level since January 12 this year; while high-sulfur coal grade index was at 2,333 yuan/t, a month-on-month jump of 319 yuan/t.

 

However, prices of coke, as the upstream industry to coking coal, are somewhat even lower than feed coal prices.

 

On December 1, the CCI assessment for Luliang and Tangshan Quasi Grade I metallurgical coke both remained stable day on day at 2,210 yuan/t, ex-plant with VAT, and 2,410 yuan/t, DDP with VAT.

 

Even though coke producers have completed two price increases, they maintained previous capacity utilization, with most restraining output by 20-30% to mitigate losses, and showed quite limited interests in lifting production.

 

The overall capacity utilization at Sxcoal-surveyed coking plants continued to decline, falling by 0.64 percentage point on the week to 80.14% over November 24-30, marking the 13th straight week of decline, Sxcoal's tracking data showed. Coke inventory held by the surveyed mills dropped 0.1 day to 10.66 days of usage.

 

Some participants foresaw a huge possibility that steelmakers are inclined to accept the third round of price hike, primarily driven by still low coke stocks.

 

One Tangshan-based steel company source told Sxcoal coke stocks were not high at nearby mills, enough for four to five days' worth of consumption, and they need to build stockpiles sufficient for at least ten days for winter storage.

 

The remaining steel-making profits also raised the possibility for steelmakers to agree on the third adjustment. Sources noted mills are still able to obtain 80-100 yuan/t of profits for rebar.