SINGAPORE: Dalian coke futures slumped for a third straight session on Tuesday, weighed down by weak demand for the steelmaking raw material in China and as steel mills lowered their buying prices citing ample stocks.
The most-traded coke for May delivery on China’s Dalian Commodity Exchange ended the daytime trade down 1.2% at 2,151.50 yuan ($330.56) a tonne, after earlier falling to 2,110 yuan, its weakest since Nov. 2.
Dalian coking coal, the material used to produce coke, lost 2.1%.
“The demand for coke has dropped significantly,” analysts at Sinosteel Futures said in a note. “Last week, the blast furnace ironmaking capacity utilisation rate of 247 steel plants (in China) was 87.16%, a decrease of 3.23 percentage points from the previous month.”
Coke is used as a reducing agent in melting iron ore, a key steelmaking ingredient, in blast furnaces.
The blast furnace capacity utilisation rates have gone down in the wake of smog-controlling production curbs in China’s top steelmaking city of Tangshan, which may be extended and widened, as authorities are seen moving to tighten environmental regulations.
The “rapid tumble” in Chinese coke prices continued, with several steel mills in Shanxi and Hebei provinces announcing reductions in buying prices after building up their stocks, Mysteel consultancy reported.
Benchmark Asian iron ore futures rebounded after a two-day selloff spurred by worries about steel production curbs in top producer China.
Dalian’s most-active May iron ore rose 2% to 1,039.50 yuan a tonne, while the front-month April contract on the Singapore Exchange advanced 2.4% to $154.75 a tonne by 0740 GMT.
Spot 62% Fe iron ore traded at a six-week low of $157.50 a tonne on Monday, SteelHome consultancy data showed.
Construction steel rebar on the Shanghai Futures Exchange fell 1.8%, while hot-rolled coil gained 0.2%. Stainless steel advanced 1.5%.