China: Coking coal supply recovers on mine resumptions

• Mining resumes in Shanxi, Inner Mongolia sees further fall
• Prices slide amid tepid demand, despite lower stockpiles

Mysteel Global: China’s coking coal supply saw a quick recovery during the week of 8-12 September, as most previously halted mines in key areas restarted operations after safety-related disruptions.

Mysteel’s surveys on the 523 Chinese coking coal mines showed that their capacity utilisation rates over 4-10 September increased to 82.7% on average, up by 6.9 percentage points from the prior week’s seven-month low, and daily raw coal output of the surveyed mines jumped by 9.1% w-o-w to average 1.86 million tonnes (mnt)/day during the same period.

However, regional production trends were uneven, with mining resumptions concentrated in North China’s Shanxi province — the country’s largest coal-producing heartland, while in Inner Mongolia — the country’s second-largest coal hub, also located in North China — coking coal production declined due to mining face movements at a leading miner, survey respondents disclosed.

Despite the recovered production, total stockpiles at the surveyed 523 mines moved lower by 11 September, with washed coal stocks falling by 5.1% w-o-w to 2.55 mnt, while raw coal stocks dipped by 0.3% w-o-w to 4.73 mnt, Mysteel’s tracking data showed, indicating improved downstream demand temporarily supported by the recent rebound in mills’ hot metal output.

With relaxed safety regulations, coal processing activity also warmed up last week. Daily output of wash plants affiliated to the 523 coal mines registered a 5.1% w-o-w increase to average 728,400 t/d during 4-10 September, while that of 314 independent coal washeries rebounded by 1.5% to 256,100 t/d.

Under such circumstances, China’s coking coal prices extended the downward trajectory in the past week, with some high-priced varieties adjusted lower to cater to buyers’ expectations. By 12 September, Mysteel’s assessment of the national composite coking coal price sat at RMB 1,181.7/tonne (t) ($165.8/t), including 13% VAT, down by RMB 5.1/t from a week earlier, and prices of the leading brand Anze low-sulphur primary coking coal in Linfen city, Shanxi province, stood flat w-o-w at RMB 1,420/t.

Although domestic steel mills’ hot metal production recovered quickly last week, many still held a relatively cautious stance towards coking coal restocking due to their meagre profits and an uncertain outlook for the near-term steel market, according to sources.

Coking coal stocks at the 247 Chinese steel mills under Mysteel’s survey dipped by 0.26% w-o-w to 7.94 mnt as of 11 September, while those at the 230 independent coke plants logged a larger w-o-w fall of 3.7% to 7.52 mnt.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.