China’s coking coal prices showed signs of bottoming out in the middle of this week, with online auctions fetching higher prices thanks to the growing buying appetite from traders and coking plants.
On May 19, one auction for 10,000 tonnes of mid-sulfur primary coking coal (S≤1.2%, A≤12%, G≥90) supplied by a Liulin-based mine in Shanxi was started at 2,500 yuan/t, with 2,000 tonnes concluded at 2,710 yuan/t and 8,000 tonnes at 2,705 yuan/t.
The deals pointed to a premium of 205-210 yuan/t from the starting level, representing the recovered buying appetite compared with auction failure at a starting level of 2,700 yuan/t on May 17, Sxcoal learned from a source at the firm.
Miners in other production hubs in Shanxi also observed price growths. One miner raised offer price of fat coal by 100 yuan/t to 2,700 yuan/t, and expected more supports for prices as coking plants maintained high production enthusiasm.
Some traders and coke producers started to resume restocking of some premium coal grades that had declined to the relatively desired levels, which gradually eased pressure on coking coal mines to get rid of high stocks.
The latest Sxcoal tracking data showed on May 19, raw and washed coal stocks at the surveyed 88 mines inched up 0.2% and 0.3% respectively compared with the week-ago levels, significantly slowing from rises of 24.4% and 27.6% in the preceding week.
However, the market hasn’t been out of downside risks for now, as most coke producers’ lingering cautiousness kept driving down offers by some miners. But more miners have put brakes on their downward price corrections, Sxcoal learned.
In the import market, Mongolian coking coal offers trended lower as the emerging buying interest from coke producers was still too subtle to support prices.
The prevailing offers of Mongolian #5 raw coking coal were at 1,950-2,000 yuan/t, ex-stock Ganqimaodu, and a few orders with a comparatively larger volume were settled at around 1,900 yuan/t.
China’s Mongolian coal intakes through Ganqimaodu border crossing have stayed above 350 trucks for five straight days, with the volume at 365 trucks on May 18, Sxcoal tracking data showed.
In the downstream coke market, the near-term outlook was still divided among participants, with some still seeing downward risks and some expecting coke prices to stabilizing.
“Still weak sales and prices of finished steel have forced some smaller mills to cut production and slash coke purchases,” one trader source told Sxcoal.
Data showed rebar production at the surveyed mills declined 4.8% week on week on May 19, while inventory of the product climbed 0.6%.
Some participants saw coke prices will stabilize mainly due to firm cost support.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
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