China’s coking coal price downturn is expected to gradually slow down ahead of the Chinese New Year holidays. The decline is partly ascribed to falling supplies as some miners started to suspend production for the holidays.
Sxcoal learned some smaller miners in Shanxi and Inner Mongolia are planning to gradually suspend production this week, while some large miners would be on leave several days ahead of the CNY holiday, which officially starts on January 21.
“Supply of coking coal in the market is expected to continue contracting in the following two weeks as more miners will halt production. Some local miners have already suspended signing new contracts as their existing orders have covered their sales before the holiday,” said one Wuhai-based miner in Inner Mongolia.
This is expected to offset part of the bearish sentiment arising from the growing cautious buying stance from coke firms that were struggling to make a profit after completing the first round of RMB 100-110/t coke price cuts in early January.
“As supply is expected to decline, demand for some backbone coal remains resilient, suggesting a significant price cut will be less likely, while some modest downward adjustments are still possible,” said one source with a mine in Anze of Linfen, Shanxi. He revealed a group of local miners are likely to suspend output from around January 15.
On January 7, a large state-run coke firm in Inner Mongolia issued a tender seeking 30,000 tonnes of high-ash and low-sulphur coal with a ceiling price of RMB 1,880/t, and the demand was finally fully met at a price of RMB 1,820/t, Sxcoal learned.
Mongolian coking coal prices, imports extend decline
Offers of imported Mongolian coking coal continued to decline at China’s Ganqimaodu border port amid lukewarm inquiries from the buyers.
Sxcoal learned Mongolian #5 raw coking coal was offered at RMB 1,450-1,480/t, ex-stock Ganqimaodu with VAT and in cash, down by around RMB 150/t compared to the high in December.
Daily Mongolian coal inflows through the largest inland border port slumped last week. The daily customs clearance of Mongolian coal trucks averaged 598 over January 2-7, down 270 truck compared with a week earlier, Sxcoal’s tracking data showed.
The daily figures further fell to about 450 trucks in the recent two days, data showed. Besides demand reasons, Sxcoal learned the slump was also partly due to the pending renewal of 2023 contracts between miners and buyers.
Coke prices on a second decline
A group of steelmakers in Hebei, Shanxi, Shandong and Tianjin requested for reduction in coke prices by RMB 100-110/t effective from January 10, marking the second round of price cuts.
With more mills shifting to on-demand buying after their winter restocking demand was met, market participants saw the price cut would be gradually accepted by coke firms this week amid a loose market fundamental and there is a likelihood of a third round of decline in the next week.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
Leave a Reply