China’s coking coal and coke futures surged on February 21, backed by positive expectations on the replenishment from the steel sector after the Winter Olympic Games.
The most-traded coke futures for May delivery on the Dalian Commodity Exchange ended up 3.56% to 3,389.0 yuan/t, surging 3.56%, with the intraday high notching 3,398.0 yuan/t, a new high since late October and surging 49.0% from 2,280.0 yuan/t.
Backed by good profit margins and a positive outlook of demand from the infrastructure sector, steelmakers, especially in northern and eastern China, are widely believed to resume production actively after the Winter Olympic Games.
This would lead to a significant decline of days of coverage for steel-making inventories and is highly likely to spur replenishment.
Coking plants at key production areas were less motivated to raise production due to thin profit after two rounds of price cuts totaling 400 yuan/t, although the downward revisions of coking coal prices have cushioned the decline.
Coke supplies remained at a low level as a whole, which, coupled with growing demand from port-side traders, has added to the upward potential.
Due to the continuous expansion of the spot-futures prices spread, especially considering the strong expectation of the post-sport events resumption of steel production, most market participants are relatively optimistic about the market.
With the increasing buying rush from some speculative traders, some coke producers start to raise offers, Sxcoal learned, but the clearer market direction will be decisive on the actual recovery of steel capacity.
On February 21, Fenwei assessed the price of Luliang Quasi Grade I coke at 2,560 yuan/t, ex-plant with VAT, unchanged week on week; the assessment of Tangshan Quasi Grade I coke was at 2,760 yuan/t, also unchanged.
The Rizhao Quasi Grade I coke in Shandong was assessed at 3,030 yuan/t, FOB, up 130 yuan/t week on week.
On February 21, the most-active coking coal contracts on the bourse surged 5.04% to 2,646.5 yuan/t at the close. The intra-day high, at 2,658.0 yuan/t, also reached the highest since late October, surged by 77.0% compared with a low of 1,501.0 yuan/t.
Auctions of coking coal in some mines of Shanxi were settled at higher levels compared with the preceding week and the transaction volume also gained. In Wuhai of Inner Mongolia, some mines stopped production and transportation due to environmental checks, Sxcoal learned.
Some mines slightly raised prices as purchases from low-stocked coke producers improved lately. Traders also started small-volume hoarding. Fat coal, primary coking coal and 1/3 coking coal prices slightly picked up at some mines, Sxcoal learned.
On February 21, Fenwei CCI index for Shanxi low-sulfur primary coking coal stood at 2,418 yuan/t, ex-washplant with VAT and the index for Shanxi high-sulfur primary coking coal at 2,056 yuan/t, both unchanged week on week.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
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