China’s coking coal market continued to improve on May 24, as a moderate recovery in the domestic steel market has reinforced expectations that steel mills may ramp up procurement of the feed coal to meet their higher production needs in the short run.
Strengthened steel prices have enhanced profitability among Chinese steel mills last week. Mysteel’s data showed that 54.1% of the 274 steel mills it monitors nationwide were able to earn profits as of May 23, up slightly from the prior week’s 52%.
This improvement in profitability is likely to encourage steel mills to bring more of their blast furnaces back on stream, providing new impetus for coking coal sales, according to a market watcher.
The hot metal production among the same 247 mills could rise further in the near term to reach a possible peak of around 2.45 million tonnes/day, a source predicted, adding that downstream demand for coking coal could remain strong.
Trading sentiment in China’s coking coal auction market has seen some slight improvement on Friday, with Mysteel’s tracking data showing that 192,000 tonnes of coking coal cargoes were sold through Friday’s auctions, up from Thursday’s 132,500 tonnes, while still 17.2% of the total offered coking coal cargoes failed to find buyers on the same day.
Moreover, some coking coal varieties were traded at higher prices in auctions. For instance, the settlement prices for some primary coking coal and fat coal in North China’s Shanxi gained by Yuan 65-129/tonne ($9-17.8/t) on Friday, Mysteel’s tracking data showed.
In parallel, the national composite coking coal price under Mysteel’s assessment rose by another Yuan 1.6/t on day to Yuan 1,721.8/t including the 13% VAT as of Friday, marking rises for the third consecutive day.
Despite these trends, domestic steel mills were still reluctant to take high-priced coking coal grades currently, as they tried to maintain their thin profits by capping raw materials costs, Mysteel learned from sources.
The Chinese coking coal market still saw firm support from the supply side. Mysteel’s data showed that daily output of raw coal at the 523 coking coal mines it surveys dipped 0.2% on week to 1.97 million t/d over May 17-23.
The upbeat sentiment has also buoyed China’s seaborne import coking coal market on Friday, with prices of some coal grades up by Yuan 10-20/t. For example, the trading price of Russian K4 premium coking coal rose Yuan 20/t on day to Yuan 1,670/t, on ex-warehouse basis at Jingtang port in North China’s Hebei and with VAT included.
Note: This article has been exchanged under the article exchange agreement between BigMint and Mysteel.