Inflows of Mongolian coking coal through China’s largest inland border port Ganqimaodu are expected to decline in the near term following a lift of short-haul transportation costs driven by traders’ growing appetite for thermal coal.
Sxcoal learned from some local sources the border port-based traders have increased purchases of thermal coal middlings with calorific value at or above 6,000 Kcal/kg amid the continued rise of thermal coal prices at northern ports and domestic supply shortfall of high-CV coal.
With some traders rushing for thermal coal, the freight rate of short-haul transportation from Mongolia’s Tsagaan Khad to Ganqimaodu border crossing regained upward momentum, rising to around 520 yuan/t lately to 440-550 yuan/t in the wake of the National Day holiday, Sxcoal learned.
This has added to the costs of Mongolian #5 raw coking coal and started to impair traders’ import appetite, especially at a time when the downstream coking plants cut output due to tight transport restrictions to contain COVID-19 flare-ups and the environmental requests during the 20th national party congress.
Sales of imported Mongolian coking coal have been dull since the escalated transport restrictions in Inner Mongolia and Shanxi, which hindered the flow of supply to consumption areas.
And for this reason, Mongolian coking coal prices did not follow the uptrend of domestic coking coal prices as they used to.
Mongolian raw coking coal was offered at 1,680-1,700 yuan/t, ex-stock Ganqimaodu with VAT and in cash, basically unchanged compared with the preceding week, while Fenwei CCI index for Shanxi low-sulfur primary coking coal climbed 105 yuan/t week on week on October 18.
Some traders expected Mongolian coking coal to dip amid tepid trading activities, while the upward space of domestic coking coal prices would be limited due to losses at coking plants.
Coke firms proposed to raise coke prices for the second round of 100-110 yuan/t in the middle of last week, striving to reduce losses, but it has yet to be accepted by major steelmakers as of October 19.
Some coke firms in Shanxi reportedly were asked by the local government to shut down coke ovens with chamber height below 4.3 meters in batches in recent days and by the end of the year, market sources said.
Several coking plants in Luliang of Shanxi have already received similar instructions, Sxcoal understood. Luliang previously issued a document and targeted to shut down all the 4.3-meter coke ovens by the end of October, involving around 10.44 million tonnes of capacity.
Coking plants contacted by Sxcoal in other cities have yet to receive the notice, but Sxcoal will continue to follow the issue.
“If more coke firms in Shanxi close their 4.3-meter ovens by the end of the month, coking coal demand will be affected and upbeat price trend would stop,” said one trader source.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
Leave a Reply