Some coke producers in China's Hebei province raised coke prices by up to 500 yuan a tonne in June amid tight supplies, traders said on Tuesday. Higher prices of coke, which is mainly used in steel making, have added pressure to steel mills already struggling with surging iron ore prices.
Some producers in Hebei, China's second-largest coke producing province, behind Shanxi, had raised prices by 300 to 500 yuan a tonne in June, the traders said.
China's coke market is largely fragmented. The price of second-grade metallurgic coke in Shijiazhuang, the provincial capital of Hebei, had reached around 2,760 yuan ($400) per tonne, up 12 percent, or 300 yuan, from May, traders said.
In the coal-rich area of Handan, the price had only reached around 2,000 yuan per tonne, but this was still 400-500 yuan higher than last month.
Coking coal supply has been tight this year, as more than half of China's coking coal resource is controlled by small mines, many of which have been closed by the government due to safety concerns. Supply is expected to remain tight as Beijing cracks down on polluters ahead of the Olympics in August.
"We mainly use coking coal from Shanxi, where the price has risen a lot. And it is very hard to get coking coal there," said the owner of a small coking plant in Handan, who declined to be named.
Shanxi Xishan Coal and Electricity Power, China's top coking coal producer, said last week it had raised prices for washed coking coal and fat coal by 385 yuan per tonne from June 1.
Hebei, which borders Beijing, is expected to order small coking plants, deemed heavy polluters, to suspend production during the Olympics, to help improve Beijing's air quality. But industry officials and traders said the government had not issued a detailed plan.
"If factories are closed, coke supply will be even tighter," said the owner of the small coking plant. ($1=6.900 Yuan)
Source: Reuters
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