China's metallurgical coke market grappled with downward pressure amid continuous demand weakness although prices have stabilized for slightly over half a month, especially when Chinese steel mills asked for cutting coke buy prices by 50-55 yuan/t for the fifth round.

Major steel producers have decided to adjust down coke prices starting from December 27, and other mills are expected to follow suit quickly.

A main steelmaker in eastern China's Shandong province cut the purchase prices of Quasi Grade I wet-quenching coke to 1,520 yuan/t for coke suppliers inside the province, and 1,530 yuan/t for those outside the province. The new price for Quasi Grade I dry-quenching coke decreased to 1,825 yuan/t, delivered basis with VAT and on banker's draft.

In northern China's Hebei province, the new purchase prices for Grade I wet-quenching coke in a leading steel company decreased 50 yuan/t to 1,760 yuan/t and Grade I dry-quenching coke fell 55 yuan/t to 2,010 yuan/t, delivered basis with VAT and on banker's draft.

On December 27, the CCI assessments for Luliang and Tangshan Quasi Grade I Met coke stood 50 yuan/t lower than a day ago at 1,460 yuan/t, ex-plant with VAT, and 1,660 yuan/t, DDP with VAT, respectively, while that for Rizhao Quasi Grade I Met coke slid 30 yuan/t to 1,600 yuan/t, FOB with VAT.

Downstream end-users became less confident about the near-term market considering sluggish spot transactions of finished steel products amid the traditional slack season.

Molten iron output continued to dip at steel mills due to routine maintenance of blast furnaces and environmental requirements. This, together with overall medium- to high-level coke inventories, dampened mills' restocking enthusiasm. Most of them procured the raw material only to meet essential needs.

Adding to the negative mood, ferrous futures prices were on a downward trajectory. The most-traded coke futures contract for May delivery on the Dalian Commodity Exchange closed the daytime session at 1,780.0 yuan/t on December 27, down 2.01% day on day.

The most active coking coal contract on the Dalian Commodity Exchange and steel rebar contract on the Shanghai Futures Exchange also recorded drops of 1.0% and 1.27% on the same day, respectively.

Ebbing feed coal prices left room for margins among coking plants in the coke-making process, but significantly diminished the cost support to the met coke market.

In addition, slight supply contraction was not strong enough to ease overall supply surplus status, weighing on coke destocking at coking plants.

Some coke producers in Shandong, Henan and Shaanxi faced production curbs owing to environmental regulations and energy consumption issues, and individual loss-making producers based in Inner Mongolia also scaled back production. However, the majority maintained previous high production levels amid sustained profitability.

Some market sources even anticipated further coke price drops given the oversupply of coke and coking coal, reckoning that steel prices have yet to hit the bottom. Multiple coke companies resisted replenishing coking coal in light of a potential market downturn, Sxcoal learned.