China’s coking coal prices remained upbeat with bullish sentiment prevailing after the downstream coke firms completed the third round of coke price hike.
Coking coal supply contracted at major production areas, as a few miners suspended production for maintenance after completing annual output targets, which added to the already tight supply.
Miners’ coal stocks have fallen faster since the country relaxed its COVID control on transportation. And low inventories continued to keep miners with a firmer bargain power.
One miner in Jinzhong of Shanxi put 6,000 tonnes of low-sulfur primary coking coal (S 0.9%, A 12%, G 95) for auction on December 12 with a starting price of 2,300 yuan/t, unchanged compared with December 2, but the volume was all settled between 2,408-2,453 yuan/t, with the average price rebounding 46.9 yuan/t from December 2 and up totaling 213 yuan/t from a low in November.
One Wuhai-based miner in Inner Mongolia offered low-ash fat coal (S 0.8%, A 12%) at 2,000 yuan/t, ex-washplant with VAT and in cash, up roughly 200 yuan/t in total since mid-November. The miner offered high-sulfur fat coal (S 1.8%) at 1,900 yuan/t, but revealed inventories of the high-sulfur kind were low at the local washing plants.
On the demand side, coke firms maintained strong purchases to stock up ahead of the year-end and holidays in January. Completion of the third round of coke price hike, narrowed losses, and resilient replenishment of mills continued to inspire coke production and feed coal replenishment.
Mills generally held low inventories of coke and were inclined to moderately build stocks to meet higher production as a few mills restarted blast furnaces after their profit margins improved.
Data showed, Shanghai HRB rebar price rebounded 60 yuan/t and Shanghai hot-rolled coil increased 130 yuan/t week on week, encouraged by positive signs including eased COVID stance, and Beijing’s policy package on the real estate sector, the leading steel-consuming sector in China.
The market also weighed on the growing likelihood of a fourth round of coke price hike given tight supply-demand fundamentals, which added a positive factor to the coking coal market.
On December 12, Fenwei CCI index for Shanxi low-sulfur primary coking coal stood at 2,483 yuan/t, ex-washplant with VAT, up 55 yuan/t from December 9, and the index for Shanxi high-sulfur primary coking coal was up 44 yuan/t to 2,203 yuan/t.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal
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