China’s coking coal sales remained slow in major production areas, along with a sustained cautious buying stance from coke firms and the COVID-19-induced transportation curbs, resulting in continued price declines.
“Sentiment remains slightly bearish as most coke firms still prefer to be on the sidelines after miners cut prices. Some miners are planning further reduction to boost sales,” said one Linfen-based miner source in Shanxi.
Some settlements of low-sulfur primary coking coal (S 0.5%, G 85) in the city dropped to around 2,250 yuan/t, ex-washplant with VAT, down by accumulatively 400 yuan/t from the previous peak in October.
Settlement of similar coal in Qinyuan county in Changzhi of Shanxi also fell by around 390 yuan/t from the highest in October to 2,230 yuan/t, ex-washplant with VAT, Sxcoal learned from local miners.
“Apart from coking plants’ prudence, unsmooth transportation due to regional road restrictions and tight COVID checks also affects coal sales, leaving inventories piled up,” said a second source in Anze of Linfen.
On November 2, Fenwei CCI index for Shanxi low-sulfur primary coking coal stood at 2,333 yuan/t, ex-washplant with VAT, down 110 yuan/t from the preceding day and falling 230 yuan/t week on week.
In the import market, Mongolian coking coal prices further lost ground amid dull demand from Chinese users.
The prevailing offers of Mongolian raw coking coal stood at 1,580-1,600 yuan/t, ex-stock Ganqimaodu with VAT and in cash, down from a peak of 1,680-1,710 yuan/t in October, Sxcoal’s data showed.
On November 1, 617 trucks loaded with Mongolian coal cleared customs through Ganqimaodu border port, down to the lowest since October 25, Sxcoal’s tracking data showed.
Outside China, an offer for 80,000 tonnes of Australian Peak Downs low-vol coking coal was heard at $323/t FOB, with the delivery date on November 22, but no deal has reached as buyers thought the price level was high and overall demand was weak, according to a trader source.
Japan, one of the top buyers of Australian metallurgical coal, faced falling demand in the steel sector. The country’s steel production fell by 12% year on year and 3% month on month to 7.1 million tonnes in September, marking the fourth straight month of fall, data showed from Japan Iron and Steel Federation.
Coke prices still face downward risk after 1st cut
China’s metallurgical coke prices are expected to further decline after completing the first round of 100-110 yuan/t reduction, multiple participants told Sxcoal.
“With the continued lukewarm appetite from mills and uncertain demand by the steel consumers, participants become more pessimistic over the near-term market, expecting three rounds of coke price cuts in total before stabilizing,” said a coke trader at Rizhao port in Shandong.
“Mills only buy the smallest amount to meet daily production demand and they are breaking down restocking demand in phases. Some mills said they will consider doing some restocking after two rounds of reduction,” said a second trader source at the port.
Sxcoal’s data showed coke stocks at Rizhao and Dongjiakou ports in Shandong were 1.75 million tonnes, falling 90,000 tonnes week on week and down by two consecutive months. Traders usually moved to the sidelines when the market remained on a downtrend.
Offers of Quasi Grade I coke stood at 2,650-2,700 yuan/t, ex-stock Rizhao port with VAT and in cash, and continue declining, Sxcoal learned.
“Construction steel transaction rebounded significantly to 193,400 tonnes on November 1, up from 142,700 tonnes on October 31 and rising from an average of 149,700 tonnes in the preceding week. This is a good sign for the steel market, but it remains unclear if the strong trades can sustain,” said one steel trader source.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
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