Coking coal market remained relatively robust in China as transactions increased during the May Day holiday, with coking plants stepping up their buying activities in response to eased losses and production ramp-up.
Traders were actively involved in pre-holiday shipments and negotiations for forward deliveries. Although some buyers with existing orders showed reluctance, significant transactions were heard taking place during the holiday season, one Shanxi-based trader noted.
Coking plants have increasingly raised their production before and during the holiday. Despite some ongoing small-scale maintenances, overall operations remained stable.
“We have raised production ahead of the holiday; stamp-charging coke ovens are running at full capacity, but not the top-charging ovens, which are not less profitable,” said one coke producer in Hebei. While noting not high coke inventories were at steel mills, he anticipated that coke price may further increase.
One source expected the upward trend to sustain for another ten days to two weeks considering favourable steel demand and continued resumption at steel mills.
As for the supply side, a few coal mine accidents in major production areas recently resulted in a slight reduction of supply. It had no significant impact on the production of neighbouring coal mines, and the supply of coking coal remained relatively stable, according to one trader source.
Some other mines also observed supply disruptions due to safety inspections and frequent longwall changes.
The fourth coke price increase provided strong support for coking coal prices. During the May Day holiday, online auctions settled in mixed trends but overall prices remained at a high level.
However, concerns also arose among participants in the face of high coking coal prices. Some buyers became cautious about coal purchases.
“We have not yet scaled up production and currently maintain operations stable. Although the production cost of coking coal has decreased, the high inventory cost has led to continuing losses of even over 100 yuan/t,” one Henan-based trader told Sxcoal.
On 6 May, the CCI index for Shanxi low-sulfur primary coking coal remained stable compared to the pre-holiday level at 2,000 yuan/t, ex-washplant with VAT, while that for mid- and high-sulfur primary coking coal stood at 1,830 yuan/t and 1,812 yuan/t, respectively, both unchanged.
In terms of the import market, the trading activity of Mongolian coking coal was affected by the May Day holiday, with port operations suspended for three days from 1-3 May. Traders mostly adopted a wait-and-see approach.
Spot offers of Mongolian 5# raw coal stood around 1,350-1,360 yuan/t, while that for Mongolian 3# washed coal was approximately 1,520-1,530 yuan/t, similar to pre-holiday levels, both ex-stock Ganqimaodu with VAT.
Note: This article has been exchanged under the article exchange agreement between CoalMint and SX Coal.