China's coking coal market is poised to reach a plateau, with price rally waning alongside the growing prudence in procurements from downstream users and middlemen.

 

On December 7, the CCI indexes for Shanxi low-sulfur and high-sulfur primary coking coal stood at 2,518 yuan/t and 2,333 yuan/t, both unchanged day on day. The index for Lingshi fat coal was also flat at 2,350 yuan/t.

 

Despite continued purchases from coking plants, most of the new deals reached were to meet rigid demand. Few cokemakers still wanted to build feed coal stocks up at the current elevated prices.

 

Sxcoal's data showed primary coking coal prices in Shanxi have surged by around 280-320 yuan/t since the start of November, outpacing the 200 yuan/t increase of coke prices during the same period, posing challenge for coking plants to reverse loss status.

 

Middlemen like washing plants and traders also re-adopted a cautious stance toward purchasing the material.

 

"Inquiries from customers in Shanxi have been reducing quickly," said one source with a washing plant in Wuhai of Inner Mongolia. "As local washing plants gradually adopted a wait-and-see stance on buying raw coal, a few miners have started to lower prices to attract orders."

 

He maintained prices temporarily stable, but foresaw the likelihood for mild downward corrections in the near term.

 

One Lingshi-based washing plant in Shanxi offered high-sulfur fat coal stable at 2,300 yuan/t and expected the price to stay flat in the near term, citing a lack of buying strength from coking plants.

 

Improved coking coal supply and the expectation of higher availability also contributed to the growing cautiousness in the market.

 

Raw coal output at the surveyed coking coal mines gained 0.58% week on week and washed stocks climbed 0.7% during the week ended on December 7, both the first increase following five straight weeks of fall, Sxcoal's tracking data showed.

 

Raw and washed coking coal stocks at the surveyed mines fell respectively by 193,000 tonnes and 375,000 tonnes compared with their week-ago levels, both marking the lowest decline in the past four weeks, Sxcoal's data showed.

 

With the ongoing third round of coke price hike encountering greater resistance from steel mills, some participants started to think that coke prices may also be likely to see a turning point, which in turn affected the outlook for the coking coal market.

 

Online coking coal auctions of major miners in Shanxi concluded with mixed results. While high-quality backbone grades continued to enjoy smooth sales due to their scarcity, some other grades settled lower or even failed to be sold out as buyers shunned purchases at high starting prices.

 

A coal mine in Yan'an of Shaanxi was ordered to suspend operation after a transportation accident occurred late December 6 caused one death. Nearby coal mines are operating normally as of writing.

 

The mine, with an annual production capacity of 600,000 tonnes, mainly produces gas coal. Participants reckoned the impact would be limited, considering that the supply of gas coal is not tight in China.

 

Import market weakens

In the import market, a few traders were heard to have slightly reduced their offer prices of imported Mongolian 5# raw coking coal in a bid to spur sales. Most offer prices remained temporarily firm at 1,680-1,800 yuan/t, ex-stock Ganqimaodu with VAT, Sxcoal understood from sources.

 

In the seaborne market, traders reported slack transactions for Russian coking coal with late December and early January laycans due to high offer prices from miners. Spot stocks at Rizhao port in Shandong have fallen to low levels, sources said.

 

Australian FOB coking coal market saw more bids from global end users, partly spurred by concerns of possible supply disruption due to the tropical cyclone Jasper, which was at category three on December 6 and is expected to strengthen further to category five as it moves towards the Queensland coast.