China’s coking coal market remained on the downside risk as some online auctions failed or concluded lower on July 12 amid wide buy-offer gaps.
One Luliang-based miner in Shanxi put 5,000 tonnes of low-sulfur fat coal (S 0.5%, A 11%, G 90) for auction, but failed to fetch results even after the miner cut the starting price by 200 yuan/t compared with June 15 to 2,800 yuan/t. The previous auction was concluded at 3,050-3,055 yuan/t, Sxcoal learned.
“Coking plants are still expecting a further decline in coking coal prices, with their bids well below the current sell prices,” one source with the mine told Sxcoal.
This was echoed by a Shaanxi-based miner, saying sales remained slow as his customers’ acceptable buy prices for gas coal were 1,500 yuan/t or below compared with the current offers of around 1,800 yuan/t.
Some settlement prices were heard to have further declined in Changzhi of Shanxi. One auction of low-sulfur lean coking coal (S 0.5%, G 65-75) was started at 2,650 yuan/t, down 50 yuan/t compared with July 7, and concluded at 2,650-2,655 yuan/t, retreating 125-140 yuan/t during the same period.
However, the bearish sentiment and persistent cautious buying stance from coking plants and traders have eclipsed the supply reduction at some mines hit by heavy rainfalls on July 11.
Growing talks on lifting Australian coal import ban
Talks over China lifting its import ban on Australian coal continued simmering in the market after the foreign ministers of the two countries met for the first time in three years on July 8.
“China may lift the ban likely in August and September and some mills have started the preparation,” one Shanxi-based trader source told Sxcoal.
“It remains unclear if the market talk is genuine, but it could be true, considering it is possibly the right time to remove the ban after Australian coking coal prices slumped and may help improve the supply-demand fundamentals,” said a second trader source.
“Domestic coking coal prices are hovering at high levels even after declines, yet the downstream coking plants and mills are running at a loss. That has hurt the development down the supply chain and would not be unsustainable in the long term,” he added.
Downstream coke prices still under pressure
Some steel mills in the country’s top steel hub Hebei requested to cut coke prices by 200 yuan/t for the third round as steelmaking margins were further eroded by weaker steel product prices.
The request came just after a few coke producers proposed to raise coke prices by 100 yuan/t a day earlier, suggesting the price tussle between the two could further intensify.
Some market participants reckoned the third decline would still likely materialize after deep steel price falls and weak futures prices.
Shanghai HRB 400 rebar declined by 150 yuan/t day on day on July 11, bringing the accumulative decline to 710 yuan/t compared with the preceding month. Tangshan billet price also dropped by 100 yuan/t to 3,820 yuan/t, which was 700 yuan/t lower compared with the preceding month, data showed.
A continued slump in the futures market added to the bearish sentiment in the market. On July 12, the most-traded rebar contract on the Dalian Commodity Exchange ended at 3910 yuan/t, down 4.26%.
The most-active coking coal and coke futures dived 4.19% and 5.38% respectively to 2,101.5 yuan/t and 2,753 yuan/t at the close of the daytime session.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
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