CCIA calls on coking companies to suspend production

The slump in Chinese steel prices has prompted mills to lower their coke purchase prices, but the coking industry is opposing this and instead proposing production cuts.

On Monday, China’s steel market collapsed and some mills lowered their coke buying prices by CNY 300/tonne ($45/t). The China Coking Industry Association (CCIA) thus held an industry meeting late on Monday, calling on coke companies to respond to current market conditions by cutting production rather than prices, Kallanish notes.

CCIA hopes companies participating in the meeting will adhere to the principle of “not producing at a loss and not selling if there is no profit”, by suspending coal purchases, it says. It adds that most companies will suffer serious losses of up to CNY 450/t if they accept the price reduction request from steel mills.

The proposal is mainly designed to support current coke demand. CCIA says coke stocks are currently low, high-quality coke is still very popular, and there are customers urging shipments. Coking firms should focus on only the highest paying customers as a result, it argues.

A steel mill source told Kallanish on Tuesday they will increase coking coal and coke purchases, and this could boost prices in the short term. Coke futures on the Dalian Commodity Exchange for September 2022 settled at CNY 2,953.5/t on Tuesday, down CNY 93/t from Monday.

Kallanish Asia