- News of potential output curbs continues to boost prices
- DCE futures rise 11% d-o-d, auctions see higher offtake
Mysteel Global: China’s coking coal market displayed stronger surges on 23 July amid extended bullish sentiment. Mysteel’s assessment of the national composite coking coal price gained a substantial RMB 31.7/tonne (t) ($2.9/t) d-o-d — the sharpest daily rise since early October last year — to RMB 1,102.5/t, including 13% VAT.
Impacted by China’s possible move to curtail coal overproduction in main producing hubs, the prevalent outlook for a graver supply-demand imbalance has continued fanning optimistic sentiment among market players, underpinning both futures and spot coal markets, Mysteel Global noted.
On Wednesday, the most-traded September contract for coking coal on the Dalian Commodity Exchange closed the daytime trading 11% higher at RMB 1,135.5/t, hitting the daily upper limit for a third straight session and touching the highest since late February.
The drastic lift in sentiment continued supporting futures prices, which also persuaded more arbitrageurs to keep active procurement in the spot coking coal market. Meanwhile, domestic coke and steel producers also maintained brisk replenishment of the feed coal, Mysteel learnt.
Additionally, two leading Chinese steelmakers in North China’s Hebei and East China’s Shandong yesterday agreed to the latest met coke price hikes proposed by many coke firms, marking the formal materialisation of this round of coke price rises across the country. This also contributed to the feverish mood for the upstream coking coal market.
Wednesday’s coking coal auction market thrived further, with the traded volume swelling 61% from a day earlier to 447,000 t and the failure rate easing to 9.7% from Tuesday’s 11.5%, Mysteel’s tracking data showed.
Prices of Anze low-sulphur primary coking coal, a major premium variety produced in Linfen city, North China’s Shanxi province, soared by another RMB 60/t d-o-d to RMB 1,380/t on 23 July, on an exw basis with VAT, marking the seventh increase this month and lifting the total rise to RMB 210/t, according to Mysteel’s assessment.
The mid-sulphur washed primary coking coal in Jinzhong city of Shanxi also inched up by RMB 30/t d-o-d to RMB 1,110/t, while washed gas coal in Yan’an city, northwestern China’s Shaanxi, surged by RMB 70/t to RMB 870/t, both on an exw basis with VAT.
But some participants were sceptical about the real impact of the expected overproduction crackdown move on China’s coal supply since most operations in Shanxi, Inner Mongolia and Shaanxi — the country’s top three coal-producing bases — are generally in line with the licensed capacities. Concerns lingered that once sentiment fades, the market could face a correction.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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