Paradoxically, the rising Coking Coal price trend has virtually placed China in a competitive position in comparison with the Asian counterparts—Japan and South Korea.
Steel makers in Japan and South Korea mostly rely on seaborne Coking Coal, sourced predominantly from Australia. Whereas, China is comparatively less dependent on imports of the coal as the country has domestic Coking Coal reserves.
Continuing to exhibit a rising trend, spot price of Coking Coal rose to USD 242.90/MT in Australia, as on 20 Oct’16.
Although, the domestic Coking Coal prices in China also have been moving upwards, yet the rates were below that of the landed costs of imports. In the Dalian Commodity Exchange of China, Coking Coal futures went up to Yuan 1,235/MT on 21 Oct’16.
In China, production of Coking Coal was up by 7.3% to 39.29 MnT in Sep’16 as compared with the corresponding month of the preceding year. Moreover, production of the coal during the Jan-Sep’16 period in that country was at 331.74 MnT, which was, however, down by 1.6% from the same period of 2015.
Imports from Mongolia also insulate China from the impact of rising Coking Coal prices in Australia. Normally, prices of the coal variant in Mongolia are less expensive than that in Australia.
According to Customs Data, China imported 37.9 MnT of Coking Coal during the Jan-Aug’16 period. Out of the imports, 12.78 MnT was sourced from Mongolia. And, imports from Mongolia during the period surged 51.7% against that in the same period of 2015. At the same time, imports from Australia during the period were at 18.75 MnT, which was up by 8.5%; clearly indicating the growing preference of Chinese steel makers for the comparatively low cost Mongolian Coking Coal.
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