China’s coking coal prices extended rise on the first work day after the three-day Dragon Boat Festival holiday, with many auctions concluded higher along with improved demand from coke producers and traders.
On June 3, some offers of low-sulfur primary coking coal (S 0.55%, G 80) in Linfen city, Shanxi increased by 200 yuan/t for the first time to 3,000 yuan/t, ex-washplant with VAT and in cash.
“A bullish sentiment in the steel market under the government’s stimulus on the economy has passed on to the upstream coking coal and coke markets. Coke producers saw inventory fall fast and regained buying interests for the feed coal,” one local source told Sxcoal.
Backed by good sales, one miner in Lingshi of Shanxi raised price of high-sulfur fat coal by 100 yuan/t to 2,700 yuan/t, ex-washplant with VAT.
Not only premium coking coal prices increased, offers of some inferior grades also picked up.
An online auction of 1,000 tonnes of 1/3 coking coal (S 0.6%, A 10.5%, G 85) in Puxian county in Linfen was concluded at 2,405-2,415 yuan/t, ex-washplant with VAT, up by 60 yuan/t compared with May 31, with a starting level unchanged at 2,000 yuan/t.
In Changzhi of Shanxi, 5,000 tonnes of raw coking coal (S < 0.4%) were offered at 1,500 yuan/t in an auction, flat the starting price on May 31, but were settled 124 yuan/t higher at 1,644 yuan/t on average, Sxcoal learned from sources.
In the import market, trucks hauling Mongolian coal to China decreased at Ganqimaodu border crossing during the past holiday due to the emerging COVID-19 cases.
On June 4, 388 coal trucks cleared customs at the border crossing, down to the lowest since May 19 and retreating from a recent peak of 468 on May 30, Sxcoal data showed.
Limited trades were heard during the holiday from June 3-5 amid escalated COVID control on southward coal transportation. But with an expectation of higher demand and the virus-affected supply, traders remained bullish over the near-term price trend.
Offers of Mongolian #5 raw coking coal increased to 2,000-2,050 yuan/t, ex-stock Ganqimaodu with VAT, up by 100-150 yuan/t in total since the start of the month.
A 100 yuan/t coke price hike proposed
A group of coke producers in Shanxi and Hebei proposed at the start of the week to raise coke prices by 100 yuan/t due to weak profit.
The price hike, which came at a time when some steelmakers mulled over a further price cut to ease loss, is expected to stir resistance from steelmakers.
“I am inclined to believe the 100 yuan/t price hike would materialize after a long time of tussle between producers and mills, as the actual consumption at steel mills remain not strong although sentiment improves,” said one trader source in Shanxi.
One source in Shandong, however, said it is not the high time for raising coke prices. “Steel mills’ profit is also thin and demand from the end-users just starts to rebound. Besides, some southern mills may impose product cuts as their production in the first half exceeds target,” the source added.
In the long run, market participants see more on the bright side. “Although the steel market is still weak, participants’ sentiment has been shored up by the country’s many policies to boost the economy. Both construction and auto sectors are expected to gradually improve,” one Shandong-based trader source said.
China has cut mortgage rates and reduce down payment for first home buyers and many provinces have removed restrictions on housing buying. As a result, real estate market saw a notable rebound in sales during the past Dragon Boat Festival.
Besides, the purchase tax of some passenger vehicles in China will be halved from June 1 to the end of the year, in a move to revive the epidemic-hit automobile consumption.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
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