Persistent weak buying appetite from coke producers further weighed on coking coal prices in China’s major production areas on July 20, with online auctions concluded further lower amid subdued demand.
One Luliang-based miner in Shanxi put 5,000 tonnes of low-sulfur fat coal (S 0.5%, A 11%, G 90) for auction on July 20 with a starting price down 150 yuan/t from the preceding day to 2,450 yuan/t, but only 2,000 tonnes were concluded at the level and the rest failed to reach a deal. The miner’s auction completely failed on the preceding day, Sxcoal learned.
One online auction of low-sulfur lean primary coking coal (S 0.5%, G 65-75) in Changzhi of Shanxi was started at 2,500 yuan/t, ex-washplant with VAT and in cash, down 150 yuan/t from July 13, and 19,000 tonnes out of 20,000 tonnes were concluded at the level, around 150 yuan/t lower compared with the settlement level on July 13.
“The wide decline in coking coal prices does not spur buying interests from coke producers, instead, they are increasingly cautious on issuing orders amid the price downturn,” said one coke producer in Hebei.
One Shanxi-based miner adjusted down gas coal (S 0.5%, G 85) price by 100 yuan/t to 1,650 yuan/t on July 20, ex-washplant with VAT, down by 400 yuan/t accumulatively since mid-June.
“There are still a lot of online auctions failed to reach a deal, suggesting the prices are highly likely to fall further,” said one Hebei-based coke producer.
The tepid purchases from coke producers are blamed on deeper losses after the third round of 200 yuan/t price decline and the continued downside risk as some mills are mulling over the fourth cut.
Some steel mills in Hebei and Shanxi requested to cut coke prices by 200 yuan/t on July 20, which is likely to further weigh on coke production enthusiasm.
Some coke firms in northwestern China were heard to have imposed an over 50% production cut in response to losses, a producer source in Ningxia told Sxcoal.
“Despite record losses, the fourth round of coke price cut request is still likely to be accepted by coke producers, although this may largely lead to lower coke supply,” said one source with a Tangshan-based mill in Hebei.
“The primary reason for the bearish coking coal and coke markets lies in the stagnant steel market. Extremely tepid demand for steel products from both domestic users and exports has continuously depressed steel prices to the levels well below a year ago,” said one coke trader source at Rizhao port in Shandong.
Data showed, Shanghai HRB 400 rebar and hot-rolled coil have declined by 700-800 yuan/t from the preceding month and were down by around 30% from the year-ago levels.
Steel mills are generally running at a loss and intensively arranged maintenance to blast furnaces to ease losses.
“In the second half of the year, the economic downward pressure is still large. The steel industry still faces large losses, which is likely to continue deepening,” one leading steelmaker in Shanxi said to its employees on July 20. The company encourages workers to survive the challenge by maintaining inventories of raw steel-making materials at low levels, striving to expand market and meanwhile reducing costs.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
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