Coking coal prices continued declining in major production areas of China, as more miners had to lower offers on the back of thick wait-and-see sentiment among coking plants and traders.
On October 27, Fenwei CCI Index for Shanxi low-sulfur primary coking coal was 2,563 yuan/t, falling 30 yuan/t week on week; the index for Shanxi high-sulfur primary coking coal was 2,190 yuan/t, unchanged from a week ago.
One Luliang-based miner in Shanxi put 10,000 tonnes of mid-sulfur primary coking coal (S 1.1%, A 11%, G 79) for online auction on October 27, with the starting price down 100 yuan/t from the day prior to 1,900 yuan/t. The deal was all concluded at 2,110-2,115 yuan/t, down 10-15 yuan/t compared with the preceding month and falling 280 yuan/t from mid-October.
Some miners in Qinyuan county, Changzhi of Shanxi offered low-sulfur primary coking coal (S 0.5%, A 8.5-9.0%, G 80-83) at 2,550 yuan/t, down from the previous 2,620 yuan/t, ex-washplant with VAT and in cash.
“Coking coal supply improves notably as miners have generally resumed production and constraints on transport have regionally eased, which is not conducive to maintaining steady offers,” said one Luliang-based miner.
“There is still downside pressure ahead, as we see limited improvement in buying appetite from coke firms and traders in the short run,” he added.
This was echoed by a local coke producer, saying coking plants are temporarily shunning purchases of feed coal until a significant decline in prices.
Coke demand outlook remained negative especially as some steel mills spontaneously reduced production due to deep losses, and several steelmakers requested to cut coke buy prices. Traders were generally muted on purchasing, Sxcoal understood.
Major steel mills that had released their quarterly financial reports registered sharp decline in profit, mainly due to dull demand from the real estate, home appliance, machinery and containers sectors.
Repeated flare-ups of the virus, unusually high temperatures, weak economic data and lower-than-expected consumption recovery in China, coupled with geopolitical conflict and the strengthening dollar, have resulted in soft steel demand during the third quarter, Baoshan Iron & Steel said in its financial result.
The steel major reported a sharp year-on-year decline of 74.3% in net profit attributable to shareholders during July-September.
Angang Steel said its net profit slumped 97.44% year on year during January-September.
Steelmaking profits were at low levels due to the continued decline in steel prices, adding bearishness to the coke and coking coal market.
Several steel mills requested to cut coke prices by 100-110 yuan/t, which is unlikely to materialize immediately as coking plants are also running at a loss. “The key now is to see how low coking coal prices can go and how much demand from steel mills can release in the future,” said one Luliang-based coke producer source.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
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