Rising restocking demand from coking plants continued to pull up coking coal prices at major production areas, with some high-quality grades rising by 50-150 yuan/t and some inferior grades also logging an over 300 yuan/t increase cumulatively in September.
On September 21, Fenwei CCI index for Shanxi low-sulfur primary coking coal stood at 2,460 yuan/t, rising 37 yuan/t from a day ago and from the week-ago level; the index for Shanxi high-sulfur primary coking coal was at 2,045 yuan/t, unchanged from the preceding day yet up 165 yuan/t from a week earlier.
Smooth sales encouraged some miners in Taiyuan of Shanxi to raise offer of low-sulfur primary coking coal (S 0.5%, G 85) by 50 yuan/t to 2,400 yuan/t, ex-washplant with VAT and in cash, Sxcoal learned.
Major miners contacted by Sxcoal in Changzhi of Shanxi also adjusted their offers of lean (S 0.3%, G 0-3) and meager lean coal (S 0.3%, G 10-15) by 100-150 yuan/t on September 20.
One large coke firm in Wuhai of Inner Mongolia issued a tender seeking 20,000 tonnes of high-ash low-sulfur coal (S 0.8%, A 12%) with a ceiling price of 1,850 yuan/t, but only 50% of the demand was met at the level.
The firm’s another demand for 10,000 tonnes of 1/3 coking coal (S 1.0%, A 10.5%) with a ceiling price of 1,830 yuan/t failed to fetch result, as miners were reluctant to sell at the level when inquiries remained good.
However, participants were increasingly doubtful of the sustainability of the upbeat strength as rising costs gradually erode coke profit and weaken downstream restocking interests at a time when the steel market remains dull.
“Strong rally in coking coal prices will do not good to coke and steel sectors, which will, in turn, snap the rising momentum of coking coal. There is a likelihood that coke firms may intensify production curbs to combat the rising costs and pressure from mills,” said one source with a Luliang-based coke firm in Shanxi.
“Coke firms temporarily stay in a wait-and-see stance after a few in Inner Mongolia proposed to raise prices by 100 yuan/t earlier. It is hard to say whether this round of price hike would finally spread and materialize or not, but the fact that steel mills are striving to make a profit would mean a possible setback facing coke firms on the pricing,” he added.
“Steel production in Tangshan may be impacted again by restrictions imposed by local government to curb the COVID-19 flare-ups, which would be adverse to any coke price hike,” said one Hebei-based source.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
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