- Spot buying accelerated as traders and end-users turned active
- Steel demand optimism supported coking coal price rebound
Mysteel Global: China’s spot coking coal prices continued their rebounds on January 14, supported by accelerating coal purchases from both end-users and traders. The near-term outlook for coal demand remains optimistic amid stabilizing steel and coke prices.
On Wednesday, Mysteel’s assessment of the national composite coking coal price increased by a larger Yuan 9.7/tonne ($1.4/t) from the last session to reach Yuan 1,277.3/t including the 13% VAT.
In North China’s Shanxi province, a total of 16 coking coal deals were concluded at higher prices, climbing Yuan 4-193/t compared with the last session, while 6 others registered price cuts of Yuan 3-76/t, Mysteel’s survey results showed.
For example, the price of leading brand Anze low-sulfur primary coking coal, extracted in Linfen city of Shanxi, gained a substantial Yuan 120/t on day to reach Yuan 1,620/t, EXW with VAT, ending a weeklong stability and hitting the highest level since late November last year, according to Mysteel’s assessment.
In Northwest China’s Shaanxi province, a miner in Zichang lifted its offering price for washed gas coal by Yuan 30/t to Yuan 910/t, effective from 18:00 Wednesday, and the same type in Huangling was also lifted by Yuan 30/t to Yuan 880/t starting from Thursday, both on an EXW basis with VAT, Mysteel learned.
The stabilizing prices of coke and steel also sent upbeat signals to the coking coal market, boosting arbitrage activities among coal traders and tightening availability of the feed coal for end-users, sources disclosed. They pointed out that the possibility for a successful met coke price hike is seen increasing, and some steelmakers are lifting their operations at blast furnaces amid positive steel margins, stimulating buying activity for spot coal cargoes.
Most miners witnessed smooth presales of spot coking coal yesterday, and their stockpiles were declining at a faster pace. These developments reflect a continuous improvement in coking coal market fundamentals, Mysteel noted.
On Wednesday, around 715,000 tonnes of coking coal were successfully sold through auctions, jumping by 150% from a day earlier and notching a two-week high. The failure ratio largely stood low at 8.1% of the total offered cargoes, Mysteel’s tracking data showed.
However, some participants warn that steelmakers’ production ramp-up may worsen the imbalance between steel supply and demand in the short run, which may limit the strength of steel prices and squeeze profit margins among mills.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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