Chinese coke futures surged more than 6 percent to a fresh contract high on Wednesday, climbing for a fourth straight session as producers sought higher prices amid tight supply of the steelmaking raw material and metallurgical coal.
The most-traded coke contract with January expiry on China’s Dalian Commodity Exchange rose as much as 6.1 percent to 2,388 yuan a ton. It ended daytime trading up 4 percent at 2,339.50 yuan.
With several coke-producing provinces implementing output capacity cuts as they seek to eliminate inefficient plants, supply of the processed form of coking or metallurgical coal has tightened, while demand remained brisk among steel producers.
Coal mine safety inspections and fresh coal import curbs in China, meanwhile, have combined to limit supply of coking coal, adding to the upward pressure on coke prices.
“The capacity cuts are now ongoing and demand is still firm, giving rise to a tight market balance that put upward pressure on coke prices,” said Richard Lu, CRU senior analyst in Beijing.
Independent coking plants in north and east China had announced their intention to raise coke prices again by 50 yuan a ton this week, according to Mysteel consultancy.