China's coke industry, which showed a trend of recovery after a recent sluggish performance, has again fallen into a new round of price downswings. EXW prices in major regions have all slumped with a price fall of some CNY 200 per tonne since late February. Some small coking enterprises in Shanxi have even conducted 'fire sales'.
However, many coking enterprises and industry analysts still believe that the coke price will stop falling and start to rebound in April and May when demand for steel swells owing to construction projects.
Mr Li from Changzhi Steel said "Coke price began to decline more than ten days ago. The price has lost CNY 180 per tonne."
The price of coke collapsed in the second half of 2008 with the price going as low as CNY 1200 to 1300 per tonne in some regions. But as the market gradually revived coking enterprises followed the advice of the Shanxi Coking Industry Association to raise the price to CNY 1750 per tonne in the new year. The association further hiked its guide price by CNY 80 per tonne to CNY 1830 per tonne in February.
An official from the Shanxi Coking Coal Group said "The coke price increased by CNY 300 to CNY 400 per tonne in the new year, but in the recent half month, the price fell to previous level."
Contract prices agreed by coking enterprises in Shanxi and major steelmakers have also retreated. The price was fixed at CNY 1700 per tonne several days ago, down by CNY 100 per tonne. Many steelmakers now hold a wait-and-see attitude and will make decisions after March 15th.
One official forecast the coke contract price falling by CNY 100 per tonne or more.
On March 9th second-grade metallurgical coke was offered at CNY 1650 per tonne in Taiyuan and Hejin, CNY 1750 per tonne in Tangshan, CNY 1800 per tonne in Tianjin and CNY 1750 per tonne in Huainan. Price in Changzhi and Linfen has experienced greater downswings to CNY 1400 per tonne or so.
As a result, some coking enterprises start to increase output cutback to 40% to 50% or even 70%.
Source: Steel Guru/Shanxi Youth Daily
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