Chinese coke producers were depressed about the near-term market as steel mills were expected to buy less material when large-scale production restriction policy is to cover most northern steelmaking cities.
Shijiazhuang, Tangshan, Handan in the country's leading steelmaking Hebei province, as well as Henan's Anyang, are set to cut 50% of capacity from November 15, which can be regarded as the onset of the winter heating season, as one of tougher ways to combat with air pollution in Beijing-Tianjin-Hebei area.
Currently, most steel mills are about to deal with their high-level stocks. Mills in Hebei, in particular, planned to mainly consume their stocks in the rest days of the month.
A steel maker from Tangshan reported rapid-rising stocks recently due to less buys and consumption. "I'm sure coke prices will go down further during the upcoming restriction," he added, "as sales of the material will go poorer because the stock level now is able to cover a long time of use."
Stocks were increasing as well at coking plants, even though more plants were forced to reduce operation rates amid weak profitability.
"We've cut 50% of production capacity because we are losing money now," a Luliang-based producer acknowledged, "let alone surprise inspections at night."
A Wuhai-based producer also reported 30% capacity curtailment. "We are coming to the brink of loss," said the man.
Inquiries emerged at Rizhao port, as the port had restocking demand recently after the former coke export orders had been fulfilled.
"But the inquiries didn't translate into deals," said a trader at the port. "Rizhao port exported 280,000 tonnes of coke or so in October. Most are stocks from coking plants."
"The market is still sluggish now. Almost all traders here sign orders with steel makers before buying cargoes from coking plants," he added.
(Writing by Alex Guo Editing by Tammy Yang)
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