Chinese coke firms are likely to further slow coking coal restocking after their inventories piled up amid prudent purchases from steel mills, adding to the gloomy mood in the feed coal market.
Sxcoal’s tracking data showed coke stocks at the surveyed coking plants rose by 21.6% on August 25 compared with the preceding week, marking a notable rebound after three straight months of decline.
“Mills only want to maintain their coke inventory at a minimum level to meet production needs, so some have reduced purchases after the previous restocking,” said one Luliang-based coke producer source in Shanxi.
Besides, the availability of coke supply increased as traders accelerated sell-off activities.
“Coke stocks reach a high level at eastern ports after nearly a month of rising, and some port-side traders have been trying to clear their on-hand inventory for fear of a possible retreat in coke prices,” said one Rizhao port-based trader in Shandong, adding the loosened supply restrained mills’ restocking interests.
However, coking coal stocks extended fall in major production areas, possibly as the feed coal inventory movement lagged behind.
Sxcoal’s data showed the coking coal stocks held by the surveyed 88 mines in China fell 7.6% week on week on August 25, down for the fourth straight week.
Some participants were wary of the possible end of the destocking after more coke firms became prudent in placing orders.
Coking coal prices continued moving sideways, and sales status varied in different production areas.
On August 25, 2,000 tonnes of high-sulfur lean primary coking coal (S 2.9%, A 10.5%, G 68) was put up for auction in a Luliang-based mine with a starting price of 1550 yuan/t. Half of the volume concluded at 1,625 yuan/t and half at 1,645 yuan/t, both lower than the previous settlement at 1,738 yuan/t on August 15, Sxcoal learned.
Washing plants and traders also reduce purchases, adding to the bearish sentiment. “We offer high-sulfur fat coal at 1,880 yuan/t and have 15,000 tonnes available for sale. The market is facing downward pressure, and prices are changing,” said one source with a Liulin-based washing plant in Shanxi.
One auction for 10,000 tonnes of low-sulfur primary coking coal (S 0.5%, A 8%, G 65) was issued by a Linfen-based miner of Shanxi on August 25, but only 4,000 tonnes were concluded, with no premium at 2,550 yuan/t.
In the import market, Mongolian coking coal inflows through China’s Ganqimaodu border crossing still hovered at high levels.
On August 24, the inland port let in 563 trucks loaded with coal imported from the northern source, bringing the month-to-date daily average to 547 trucks, higher than 512 trucks during the same period in the preceding month, Sxcoal data showed.
Downstream users presented a weak appetite for the imported supplies, dragging offers of Mongolian raw coking coal down by 30-50 yuan/t week on week to 1,500-1,550 yuan/t, ex-stock Ganqimaodu with VAT.
Mills’ appetite for seaborne coking coal was also tepid, Sxcoal learned from some port-side sources.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
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