Some coking coal mines expected prices of the coke-making material to further climb backed by accelerated replenishment from coke firms and strengthened sentiment in the steel sector.
More miners reported good sales this week, resulting in a faster fall in coal inventories.
Sxcoal’s tracking data showed on December 15 raw coking coal stocks held by the surveyed 227 coal mines fell 7.3% week on week to 2.71 million tonnes, marking the fifth straight week of fall.
Shanxi, the top coking coal base, registered a significant fall of 18.8% compared with the week-ago level, data showed.
On December 16, Fenwei CCI index for Shanxi low-sulfur primary coking coal stood at 2,552 yuan/t, ex-washplant with VAT, rising 23 yuan/t compared with the preceding day; the index for Shanxi high-sulfur primary coking coal was 2,263 yuan/t, unchanged.
Active bids from coke firms continued to drive settlement levels of online auctions in Shanxi.
One online auction of 10,000 tonnes of low-sulfur primary coking coal (S≤0.5%, A≤8.0%, G≥65) in Linfen of Shanxi was started at 2,400 yuan/t, and 6,000 tonnes were settled at 2,575 yuan/t, with a premium of 175 yuan/t, and 4,000 tonnes at 2,580 yuan/t, a premium of 180 yuan/t. The settlement levels were higher compared with 2,515-2,520 yuan/t on December 8, Sxcoal learned.
Moderate rises in coking coal prices could be seen in the following days, and prices may remain firm before the New Year holiday, one Luliang-based miner in Shanxi predicted. “This could weigh down coke firms appetite for concentrated purchase,” he noted.
The market also gained some fresh strength from the emerging fourth round of coke price hike proposals by a few small coke firms, as miners are mulling over slight upward adjustments of prices after the hike is accepted by mills.
Currently major coke firms have yet to join in the fourth hike, and steel mills also stayed muted towards the proposal.
Adding to the positive mood, the steel demand is expected to be shored up after this winter, with an expected boost of construction activities.
As China’s steel production is mostly through long-route process that uses coke as material, the demand of coke and coking coal is closely related to steel demand.
China is likely to roll out new measures to support the struggling real estate, the leading steel-consuming sector in the nation, to improve the balance sheets of the industry and shore up sentiment in the market, Vice Premier Liu He said on December 15.
Liu said China will continue to see a relatively rapid pace of urbanisation, offering support for a stable development of the real estate sector, as a pillar industry for the economy of the country.
It has been rare for leading government officials to use the word to explain the importance of the sector to China’s economy since the country introduced the three red lines in August 2020 as financial regulatory guidelines to rein in the highly indebted property-development sector in China.
This indicates the country’s much relaxed curbs on the sector and priority in stabilising the economy.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
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