China Coking Industry Association on June 30 called on coke firms to resist any price cuts in wake of three Shanxi-based steel firms' request to cut coke prices by 200 yuan/t, citing the reduction would put most coke firms at a loss of more than 500 yuan/t.
Three large steel firms from Shanxi asked for a 200 yuan/t cut in coke buy prices earlier on the same day.
Coke firms have been running at a loss after they agreed to cut coke prices by 300 yuan/t for the first round on June 20. If steelmakers continue to press for the 200 yuan/t cut at a time when coking coal prices started to rebound, losses at most coking plants would be further expanded to more than 500 yuan/t, the association said.
The current macroeconomic environment has shown signs of recovery, steel prices are on track to bottom out and steel mill profits have improved. The supply-deamnd fundamentals of coke remains tight as domestic demand is expecte to grow, exports orders are good, but mills's coke inventories were at near five-year low and coking plants' stocks were also at low levels.
Major coke firms from Shanxi, Hebei, Inner Mongolia, Shandong, Jiangsu and some other provinces attending the online meeting held by the association on June 30 all agreed to suspend delivery to the three steel firms due to their irrational price cut requests.
The association called on coke firms to resist all forms of coke price reduction, adhere to the principle of not producing at a loss, and not selling if there is no profit, increase production restrictions by 30%-50%, and suspend or reduce coking coal purchases.
(Writing by Emma Yang Editing by Tammy Yang)
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