China's metallurgical coke market saw the third round of price cuts of 50-55 yuan/t implemented at the beginning of last week, bringing the total decline to 150-165 yuan/t since early this month. The reduction, after being asked by steelmakers a week ago, came amid weak cost support and persistent pressure from softening downstream demand, particularly in northern China, where colder weather curbed construction activity.

The Index

On December 29, the CR China Met Coke Price Index (CRMP) slid 3.52% week on week at 142.61 points; the CR China Met Coke Stock Index (CRMS) slipped 0.8% to 74.4 points on the same day.

Lately in the market

The cumulative effect of the three price reductions since early December chipped away at coke-making profits. While most plants remained in marginal profit territory, a growing number started to report narrow losses, particularly those with less favorable inquiries. Blending coal prices remained on the downtrend, and the overall restocking effort was subdued, although some coking plants modestly increased buying for backbone grades.

Sxcoal-surveyed coking plants saw an average profit of 34 yuan/t over the week ending December 24, contracting 26 yuan/t from the previous week, as per the latest Sxcoal survey.

Coke production continued to show diverging trends across regions. Profitable coking plants maintained stable production levels, and some plants gradually resumed operations after earlier environmental curbs eased. Nevertheless, lingering environmental restrictions in several regions, new rounds of maintenance, and tepid steel mill demand forced others to cut back.

The capacity utilization of the surveyed coking plants ticked up slightly by 0.03 percentage point week on week to 74.35% during the week ending December 24, according to Sxcoal's latest weekly survey.

Coke inventories decreased at coking plants last week, albeit at a slow pace. Some steel mills controlled coke arrivals due to low molten iron output and future market uncertainties. However, coking plants accelerated dispatches in fear of potential downside risks, and other mills began to restock ahead of expected production ramp-ups post-blast furnace maintenance.

As of December 24, the Sxcoal-surveyed coking plants had 1.01 million tonnes of coke in stock, down 8.93% from the week prior and snapping five straight months of growth.

As of December 24, coke stockpiles at Sxcoal-surveyed mills were enough to cover 11.45 days of usage, up 0.04 day from a week ago. The capacity utilization of the surveyed mills fell 0.15 pp week on week to 78.32% as of December 26.

On December 26, Luliang Quasi Grade I met coke (0.7% sulfur, 13% ash, CSR 60) was assessed by Sxcoal at 1,290 yuan/t, ex-plant with VAT, down 50 yuan/t from the week before; that of Jinzhong Grade II met coke (0.8% sulfur, 13.5% ash, CSR 55) was down 50 yuan/t to 1,170 yuan/t.

On the same day, Sxcoal assessed the price of Grade II met coke (0.8% sulfur, 13.5% ash, CSR 55) at 1,370 yuan/t, DDP Tangshan with VAT, sinking 50 yuan/t on the week. Grade II met coke of the same quality stood at 1,220 yuan/t in Rizhao, DDP basis with VAT, also a 50 yuan/t drop.

Transfer ports

Traders remained sidelined at eastern China ports in the absence of notable arbitrage opportunities. Steel mills maintained relatively low coke consumption and considered additional price cuts for coke. As a result, portside transactions were lackluster.

The combined coke inventory at Rizhao and Dongjiakou ports gained 2.83% week on week to 1.09 million tonnes on December 26, Sxcoal's data showed. The volume was down 0.91% month on month and 7.63% lower than a year ago.

On December 26, Quasi Grade I coke was assessed by Sxcoal at 1,500 yuan/t FOB Rizhao port with VAT, flat from a week earlier.

Downstream market

Chinese steel prices were range-bound during the past week. As of December 26, the price of Shanghai HRB 400 rebar (20 mm) stood at 3,290 yuan/t, down 10 yuan/t from a week ago, and Shanghai hot-rolled coil (3.0 mm) was flat week on week at 3,300 yuan/t. The Tangshan billet Q235 price fell 10 yuan/t on the week to 2,940 yuan/t.

The daily transaction of construction steel averaged 95,000 tonnes or so last week, down 4.29% week on week.

China plans to extend crude steel output controls through 2030 and will strictly prohibit the illegal addition of new production capacity, said the National Development and Reform Commission (NDRC) in an article published on its official website on December 26.

This marks a shift from short-term market interventions to long-term structural changes and aims to limit overproduction and improve the efficiency of the steel sector.

Forecast

The met coke market appears poised for further softness, given that low molten iron output and steel mill profitability challenges will continue to cap coke demand. Feed coal prices may remain under pressure amid limited demand and ample supply, especially with expectations of mine restarts post-New Year's Day.