The fourth round of coke price increase proposed by Chinese coke companies about two weeks ago is becoming less likely to materialize, mainly dampened by steel companies' softening demand following widespread operation halts owing to stronger pollution curbs in the winter.

 

In Hebei, China's top steel-producing province, some steel companies have lowered production capacity of blast furnaces after local authorities issued warnings against severe weather pollution.

 

In Tangshan, steel mills that mainly purchased billets from other steelmakers were noticed to halt operations from December 23, 2023 to January 4, 2024. Sources noted this will impact around 30,000 tonnes of finished steel per day.

 

"The recent environmental checks have disrupted normal production at coking and steel plants. Our current coke stockpiles are enough for two to three days of consumption, and coke prices are likely to drop for the first round in the next week. I plan to purchase by then," said one steel firm in Hebei told Sxcoal.

 

Sxocal understood more steel companies stopped operations of blast furnaces due to regular maintenance and losses, clearly denting their coke demand.

 

In addition, increasing steelmakers started to control coke purchases as they found difficulties in unloading as trucks concentratedly arrived amid coking plants' active shipments.

 

"Steel mills now are operating with quite low profit margins and most noted pressure in accepting the fourth coke price hike. But the likelihood of substantial price cuts for coke is also very tiny, since mills still have the needs in building up stockpiles around the end of the year," one coke trader normally conducting business in Shanxi said.

 

The potential snowfall in January was also mentioned by some steel mills as factors to prevent deep coke price decreases in the following month.

 

"We are not ready to replenish right now, but possible buys are scheduled in late-January," one Shanxi-based steel company said.

 

The environmental inspections also restrained production of coking plants, which is expected to partly offset the downsides brought by weakening coke demand from mills, and refrain from drastic coke price cuts.