Issue 17, 2024 - This week's editorial: Raw material prices see-saw in Asia, robust in China

While Australian fob coking coal dipped during the week ended 26 April due to poor market sentiment, coke prices increased in China. Kallanish assesses that on Friday last week the ex-work price of Lvliang quasi-first-grade wet quenching coke stood at CNY 1,700/t ($234.6/t), up CNY 100/t on-week and up CNY 300/t over two weeks. Anze low sulphur primary coking coal was at CNY 2,030/t, up CNY 80/t on-week. Meanwhile, quasi-first coke at Rizhao port was at CNY 2,030/t, up CNY 50/t. Climbing hot metal production, declining coke inventories, and strong coking coal prices in the near-term supported coke prices.

China's hot metal production has been recovering for one month amid declining market inventories of five major steel products, implying improved steel demand. Steelmakers are thus eager to restock coke to sustain production. In contrast, the utilisation of coke producers has recovered very slowly, and not until mid-April, due to poor margins. Mills and coke producers both saw coke inventories decline last week. Some coke producers stopped selling to wait for higher prices. In addition, some inventories were held by traders who cannot take profits until the futures price falls or spot prices gain, and this lowered the spot coke liquidity.
One steelmaker tells that it was hard for them to purchase spot coke before the third-round increase. However, these upside drivers are losing energy, thus opinions toward a fourth increase differ among market participants. Most importantly, end users struggled to accept higher steel prices. One steelmaker in northern China said that spot steel prices are struggling to move up with higher futures price.

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