The trading activities of Mongolian coking coal showed signs of cooling down this week, as many Chinese buyers were eyeing signals passed from China’s annual Two Sessions meeting that kicked off in Beijing on 5 March for the near-term market trends, Mysteel Global has learned.
Major downstream coal buyers in North China’s Shanxi province were heard preferring to sit on the fence temporarily, though they were actually interested in booking some premium coking coal from Mongolia, citing the necessity of re-assessing the market after the Two Sessions, sources shared.
New directions for China’s domestic economy trajectory this year are expected to be given during the important annual political gatherings, which could affect the prosperity of downstream steel and coke markets as well as their demand for the feed coal going ahead, an industry insider commented.
The growing wait-and-see market sentiment has slowed trade in Mongolian coking coal in China this week. For example, the total Mongolian coal truck traffic into China through Ganqimaodu, Ceke and Mandula – the three largest Sino-Mongolian border ports in North China’s Inner Mongolia – decreased by a markable 22.5% on week to 1,440 trucks on 6 March, Mysteel’s tracking data showed.
On top of this, China’s weakening steel market has also been gnawing at Mongolian coking coal prices after the Chinese New Year (CNY) ended on 18 February, as the softening steel prices have lowered affordability for raw materials among both domestic steelmakers and coke plants due to their worsened profit performances, Mysteel learned from market sources.
Besides, Chinese steel mills’ production of hot metal was hovering lower persistently in the three weeks post the CNY holiday due to their slow pace of resumption, capping their demand for the feed coal, sources added.
As a result, the prices of Mongolian 5# raw coal (ash<20%, VM<28%, sulfur<0.8%, GRI>80, MT<5%) under Mysteel’s assessment slid by another Yuan 10/t ($1.4/t) on day to reach Yuan 1,460/t on 6 March, on ex-warehouse basis at Ganqimaodu border port and with VAT included.
On Thursday, a total of 19,200 tonnes of Mongolian 3# processed coking coal (ash 11%, VM 28%, sulfur 0.85%, GRI 75, MT 9%) offered by Mongolia’s Energy Resources LLC on the Mongolian Stock Exchange (MSE) successfully concluded deals at an average price of Yuan 1,340/t with VAT excluded, marking a drop of Yuan 20/t compared to the last session, according to the MSE data.
As of yesterday, the freight rate for trucking coal from Tsagaan Khad, a major coal transfer place in Mongolia, to China’s Ganqimaodu checkpoint stayed flat on day at Yuan 115/t, Mysteel’s data showed.
Note: This article has been written in accordance with an article exchange agreement between MySteel Global and BigMint.