Coking coal production continued falling in China’s major production areas, as more miners suspended mining activities for holiday breaks and snowfall-disrupted transportation.
Sxcoal’s tracking data showed the overall capacity utilisation at coking coal mines surveyed by Sxcoal plummeted 3.15 percentage points week on week to 83.35%, and raw coal output at these mines decreased 317,100 tonnes to 8.39 million tonnes over the week ending 31 January.
Sxcoal understood most miners have stopped operations for the upcoming Chinese New Year holiday on 2 February, which marked the Little New Year, usually a week before the Lunar New Year.
Online auction failures continued to rise as coking plants have generally completed pre-holiday replenishments. Apart from purchases to meet basic demand, most coke firms were not inclined to further restock due to the sustained losses and potential downside risks of coking coal prices after the holiday.
“Coking industry is the worst-hit sector in the whole supply chain. Coke firms in key production areas in northern China still suffered 50-100 yuan/t losses,” said one source with a Luliang-based coking plant in Shanxi.
“Coking coal stockpiles are absolutely sufficient for consumption during the holiday, and since we still restrained 20-30% production due to losses we have no plan to further purchase,” one Shandong-based coke producer told Sxcoal.
On 5 February, the CCI index for Shanxi low-sulfur primary coking coal stood stable from the preceding day at 2,480 yuan/t, ex-washplant with VAT, and those for mid- and high-sulfur primary coking coal were also flat at 2,160 yuan/t and 2,150 yuan/t, respectively.
Imported coking coal
Tepid domestic demand contributed to a weaker imported Mongolian market at the start of this week. Traders continued to move offer prices downwards, with Mongolian 5# raw coal prices at 1,500-1,530 yuan/t, ex-stock Ganqimaodu with VAT.
Sluggish demand, coupled with snowstorms, continued to impact daily customs clearance at Ganqimaodu, with daily volume down below 1,000 trucks after entering February and hitting a new low to 574 trucks on 3 February.
The hammer price of Mongolian coking coal offered on the Mongolian Stock Exchange also trended lower. On 5 February, Energy Resources LLC, an indirect wholly-owned subsidiary of Mongolian Mining Corporation, concluded its auction of 19,200 tonnes of Mongolian 3# washed hard coking coal (S 0.85%, A 11%, VM 28%, GRI 75) at 1,390 yuan/t, delivered to Ganqimaodu border port, falling 70 yuan/t from 31 January.
At Ceke border crossing, offer prices for MAK A raw coal stabilised around 980 yuan/t and MAK West at 1,060 yuan/t, ex-stock with VAT.
Some traders noted Mongolian customs notified a holiday suspension from 10-12 February, with no specific notification was given from Chinese customs.
Note: This article has been exchanged under the article exchange agreement between CoalMint and SX Coal.