China’s metallurgical coal prices still faced downward pressure, with demand from coking plants and steel mills hard to improve significantly on the country’s efforts to ensure good air quality during the Winter Olympic Games.
Metallurgical coke prices had declined by two rounds totaling 400 yuan/t compared with the preceding week.
Primary coking coal and fat coal prices had fallen by 200-300 yuan/t accumulatively during the first week after the holiday, while prices of gas coal and meager lean coal were down by 50-150 yuan/t during the same period, Sxcoal understood.
The decline was primarily ascribed to weak production at coking plants and steel mills at some key production areas near Beijing in response to the local governments’ call to contain pollution.
Some coking plants in Shanxi, Hebei and Shandong were requested to cut production by around 50%, and mills in Hebei were subject to tight restrictions during the month. Sxcoal data showed the capacity utilization of the surveyed coking plants and mills fell by 3.66 and 6.67 percentage points on February 11 respectively compared with the preceding week.
“Coke and coking coal markets are still weak, but it seems they are less bearish compared with the preceding week amid slight rebounds in replenishment,” one Luliang-based coke producer in Shanxi told Sxcoal.
The country’s top economic planner said it will rationally front-load infrastructural investment in the first quarter to shore up the economy and combat slow growth, bringing positiveness for the demand of steel as a key building material in the remainder of the quarter.
“There are some blast furnaces scheduled to resume production on around February 20, which slightly spurs some buying interests from traders and mills with lower stock levels,” the source noted, citing a moderate improvement in dispatches.
“Some coking plants may consider restocking coking coal after their inventories drop too low levels and in the wake of a week-long fall of the feed coal prices,” the sourced added.
This was confirmed by a Linfen-based miner in Shanxi who reported a marginal improvement in dispatches. The source offered low-sulphur primary coking coal unchanged from late last week at around 2,500 yuan/t, ex-washplant with VAT and in cash.
However, some other participants saw these improvements in demand as too small to reverse the downtrend in the market.
“Some small mills may do some on-demand purchases, but large mills still hold mid-to-high levels of stocks. The leading mills, which play an important role in determining coke prices, are even likely to further cut prices,” said one Shanxi-based coke trader source.
“The market direction is murky at present, although sentiment marginally improves. Further attention needs to be paid to the actual recovery of steel production and downstream consumption in late February and March,” one source said.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
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