Inventories of coking coal started to pile up at major production areas of China alongside the sustained lukewarm purchases by coke firms, spurring further price cuts of miners to ease inventory pressure.
Sxcoal’s tracking data showed raw coking coal stocks held by the surveyed mines rose 10.2% week on week to 3.26 million tonnes on November 3, notching a new high since August 11 this year.
“It is relatively blurry when coking coal price will hit the bottom as demand could only worsen amid a downtrend, which will drive down prices further,” said one miner source in Taiyuan of Shanxi.
One Luliang-based miner in Shanxi put 10,000 tonnes of mid-sulfur primary coking coal (S 1.1%, A 11%, G 79) for auction on November 4, with the starting price falling 100 yuan/t from October 28 to 1,750 yuan/t. All was concluded at 1,915-1,920 yuan/t, down 40 yuan/t from October 28 and falling 480 yuan/t from the peak in October.
A Jinzhong-based miner in Shanxi reported continued prudence among coke firms even after price reductions. The miner offered high-sulfur fat coal (S 1.5%, A 10.5%, G 95) at 2,100 yuan/t, ex-washplant with VAT and in cash, down by 200 yuan/t in around two weeks.
“Coking coal prices still have about 100-200 yuan/t downward space to spur appetite from coke producers,” said a source with a large coking plant in Hebei.
“The existing high-priced coal stocks made coke production unprofitable despite recent declines of coking coal prices, and the scenario would remain when they start to use coal bought at the current level, as the third round of coke price cuts may come in place by then,” he added.
Imported Mongolian coking coal trades remained dull at China’s Ganqimaodu border crossing. The prevailing offers of Mongolian raw coking coal were steady at 1,600 yuan/t and some small trading firms offered lower at 1,500 yuan/t.
Mongolian washed coking coal prices weakened following a major steelmaker’s tender. One large steel firm in Gansu invited bids for Mongolian washed coking coal at 2,200 yuan/t, delivered basis with VAT, down by 200 yuan/t from the previous tender.
Coke firms see further downside risk next week
Some coke firms expected coke prices to further decline in the upcoming week due to continued steel production curbs, steel-making losses and loose coke supply-demand fundamentals.
“Mills, especially in Shanxi and some northwestern provinces, are restraining output due to losses and bleak demand outlook,” said one Hebei-based coke producer source, adding the national construction steel transaction remained at a low level of fewer than 156,000 tonnes on November 3, which lent limited support to steel prices.
“Mills’ demand for coke is contracting and they prefer to maintain a low coke inventory when they are lossmaking,” the source added.
Next week may see a third round of reduction for coke prices as coke stocks continued accumulating, some participants reckoned.
Sxcoal’s tracking data showed coke inventory held by the surveyed coking plants climbed 7.1% week on week to 0.78 million tonnes on November 3, marking the fourth straight week of increasing and reaching a new high since July 28 this year.
Increasing participants thought a fourth or even fifth round of fall is also possible, given still weak steel production enthusiasm.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
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