China’s coking coal market saw subduing strength following a moderate rebound in the preceding week, as coke producers shifted back to cautious stance alongside the re-emerging bearishness reinforced after the fourth round of coke price cut requested by steel mills.
Transactions of some online auctions in Shanxi started to retreat on May 24, with some coking coal grades failing to reach deals, and settlement prices also declined at some mines just in wake of price increases in the preceding week, Sxcoal learned from some miner sources in Shanxi.
One online auction for 10,000 tonnes of low-sulfur primary coking coal (S 1.0%, A 12%) at a Luliang-based coal mine in Shanxi was started on par with the week-ago level at 2,700 yuan/t, but all of the volumes failed to fetch a result, compared with an averaged trading level of 2,825 yuan/t in the preceding week.
One auction of 1,000 tonnes of 1/3 coking coal (S 0.6%, A 10.5%, G 85) in Linfen of Shanxi was started at 2,100 yuan/t on May 25, 100 yuan/t lower compared with May 20, and settled at an average of 2,230 yuan/t, up 30 yuan/t.
“Some coking plants and traders return to a wait-and-see stance amid a fierce price tussle between coke and steel makers amid the fourth round of 200 yuan/t coke price cut,” said one Shanxi-based miner.
Participants remained quite divided on the outlook for the latest coke price cut. Some expect the decline would not be accepted by coke producers due to thin margins, while some see little bargaining power on the supply side due to tepid demand from steel mills.
The impasse, coupled with slumps in the futures market, and slow release of demand from the steel sector, have prompted traders to be much more cautious in placing orders, Sxcoal learned.
Increasing coking plants in northeastern China were heard to have cut production by 10-30% in response to losses and maintained lukewarm replenishment for coking coal.
On May 25, Fenwei CCI Index for Shanxi low-sulfur primary coking coal was at 2900 yuan/t, ex-washplant with VAT, unchanged from the preceding day; and Shanxi high-sulfur primary coking coal was at 2,723 yuan/t, also steady.
On the same day, Fenwei assessed the price of Luliang Quasi Grade I coke in Shanxi at 3,160 yuan/t, ex-plant with VAT, and Tangshan Quasi Grade I coke in Hebei at 3,360 yuan/t, DDP with VAT, both unchanged from the preceding day.
Note: This article has been exchanged under the article exchange agreement between CoalMint and SX Coal
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