China coke price ramps up in late Nov, NBS Viewpoint,  Production & Sales 2017-12-06 17:23:00

China's Grade II met. coke price averaged 1,576.3 yuan/t in November 21-30, edging up 3.8% from ten days ago, showed data from the National Bureau of Statistics on December 4.


The price rebound indicates price wresting between steel and coke plants began to ease, following serious production curbs in the coking sector and restocking demand from steel enterprises in southern region.


In the past month, Chinese coke producers strengthened the implementation of production restriction measures. Coking plants in Xuzhou, Jiangsu province, cut 50% capacity. In Shanxi, China's top coke producer, plants reduced 50% capacity in Changzhi and 35% in Linfen.


Coking plants also cut production by about 25% in Hebei and Inner Mongolia.


At the beginning of December, many places issued warnings on air pollution, especially major coke provinces like Shanxi, Hebei and Shandong.


It is expected restriction measures will be strictly carried out in the coking industry from November through March.


Currently, southern steel mills haven't replenished the steelmaking material enough as expected. Large mills in Jiangxi, Hunan and Fujian posted a large stock drop from a week ago.


That may have something to do with increasing freight rates. By end-November, domestic coke seaborne freight rate has reached a new high this year. Besides the tight rail transport because of insufficient wagons, truck freight continued to go upward with rising fuel prices.


It's said profit has risen to 100-200 yuan/t in the coking sector, while profit of most steel plants reached over 1,500 yuan/t.


Enjoying huge profit margin, steel mills may leave part of the margin to their coke suppliers. Coke prices, accordingly, are very likely to maintain the upward strength in the short run.

(Writing by Alex Guo   Editing by Harry Huo)
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