26 Aug 2009 09:34

SCIA tunes down August coke reference price by $3 per ton

Shanghai. August 26. INTERFAX-CHINA - The Shanxi Coking Industry Association (SCIA) has reduced its August coke reference price by RMB 20 ($2.92) per ton to RMB 1,860 ($272.28) per ton in response to the recent slump in the steel product market, the SCIA announced on Aug. 25.

The SCIA said it adjusted the August reference price to take some pressure off downstream consumer steel mills, which are suffering from recently plummeting steel product prices, and to prevent its raw material suppliers from further hiking coking coal prices.

On Aug. 7, the association raised its coke reference price by RMB 170 ($24.89) per ton from July's price to RMB 1,880 ($275.05) per ton due to the jump in steel product prices over July and tight coking coal supplies.

"The SCIA's previous August reference price was too high, and few steel mills bought at that price. The majority of Shanxi coke producers have been selling coke at between RMB 1,800 ($263.49) per ton and RMB 1,850 ($270.81) per ton," Zeng Lili, an industry analyst with ChinaCCM.com, said.

As domestic crude steel output is expected to slide in the coming fourth quarter, the SCIA suggested that coke producers operate at 60 percent to 70 percent of their total production capacity to reduce losses and market supply.

Currently, coke producers are between a rock and a hard place with the low demand from steel mills and high raw material prices, according to industry analysts. Steel product prices have dived over the past two weeks, while coking coal prices remain at a high level between RMB 1,300 ($190.30) per ton and RMB 1,500 ($219.58) per ton.