DAILY: China’s coking coal rally eases as buyers move to sidelines

• China’s coking coal prices stabilise amid cautious buyer sentiment
• Steel mills’ production cuts impact demand, market outlook steady

Mysteel Global: China’s coking coal price rallies showed signs of moderating on October 28, as cautious sentiment grew among some buyers following temporary production cuts at steel mills in a few northern cities to improve local air quality.

Mysteel assessed the national composite coking coal price at RMB 1,330.4/tonne ($187.5/t) including 13% VAT on Tuesday, with the daily uptick easing to RMB 3.7/t from the prior day’s RMB 8/t gain.

The coking coal auction market presented a stabilizing trend yesterday, with most deals clinched at steady prices and fewer registering increases. Mysteel’s daily survey showed that in North China’s Shanxi province, only 5 auction deals witnessed modest price rises of RMB 20-40/t on Tuesday, as compared with 26 deals with price hikes ranging RMB 10-94/t a day earlier, while 3 auctions were concluded lower by RMB 3-21/t, indicating that prices of some coal grades have begun adjusting in accordance with supply-demand dynamics.

The wait-and-see mood intensified alongside a 30% blast-furnace production reduction at steel mills in Tangshan and some other cities in North China’s Hebei province from October 27, as required by local authorities to tackle air pollution till the end of this month.

Sources disclosed that steel mills slowed spot coking coal replenishment after previous hoardings, while independent coke producers became cautious about new coal purchases as well since many of them still suffered low profits despite the second round of coke price hikes materialized on Monday. Some miner sources confirmed this, elaborating that offline coking coal transactions have slowed this week.

Mysteel’s monitoring data showed the failure ratio among the total coking coal offered in auctions ascended slightly to 9.3% yesterday from Monday’s 4.8%, while around 228,500 t were successfully sold.

However, analysts believe that a short-lived demand shrinkage will not alter the current tight balance of coking coal fundamentals or lead to a supply surplus, indicating that the coking coal market will remain supported in the near future.

As of Tuesday, major miners still maintained their coking coal offering prices steady for offline trades, with the leading brand Anze low-sulfur primary coking coal produced in Shanxi’s Linfen city standing flat at RMB 1,600/t for three consecutive sessions, EXW with VAT, according to Mysteel’s assessment.

Some market players predict coking coal prices across China to gain further upward momentum in the short run, though the pace could be restrained.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.