China's coking coal market stabilized with minor fluctuations during the past week. Cokemakers were reluctant to accept high prices slowed down coking coal purchases amid the pending third coke price hike and still tight supply remained under stricter safety checks.

 

The Index

The CR China Coking Coal Price Index (CRCP) was 2,339.0 yuan/t on December 11, up 0.64% from a week earlier. The CR China Coking Coal Stock Index (CRCS) was 72.4 points, up 1.54% week on week.

 

 

Lately in the market

The overall capacity utilization at coking coal mines surveyed by Sxcoal rose by 0.48 percentage point week on week to 82.97%, and raw coal output at these mines increased 0.58% week on week to 8.35 million tonnes over December 1-7.

 

The overall supply showed a slow recovery. Some previously suspended coal mines gradually resumed production, yet intermittent suspensions were also heard at some other mines in Shanxi due to tightened safety inspections.

 

Washed coking coal stocks at the surveyed mines decreased by 2.9% week on week to 1.28 million tonnes this week, while raw coal stocks reduced by 1.1% to 1.73 million tonnes.

 

With the third round of coke price hike yet to be accepted by steel mills, coking plants scaled down coking coal purchases. Some miners continued deliveries for pre-orders and did not face inventory pressure. Sales of backbone grades like primary coking coal were comparatively smooth and coal stocks at most mines stayed low.

 

Sxcoal's data showed that coking coal stocks held by the surveyed coking plants picked up by 0.25 day week on week to 7.76 days of usage.

 

In Shanxi, coking coal mines would halt operation for checks for three days if safety inspectors arrive and could restart production if no safety issues found, otherwise would be suspension continously for rectification. Although there were mines resumed in Zhongyang of Luliang last weekend, the overall output was still restrained with other mines newly halted.

 

In Luliang, one auction for 20,000 tonnes of low-sulfur primary coking coal (S 0.5%, A 12.5%, GRI 85) settled higher at 2,540 yuan/t after starting at 2,500 yuan/t on December 7, while the previous trade was concluded at 2,360 yuan/t on December 22.

 

The price for low-sulfur primary coking coal (S 0.5%, GRI 80-85) in Anze of Linfen, Shanxi was stable at 2,550 yuan/t, ex-washplant with VAT and in cash. Local mines essentially held no stocks.

 

While most auctions extended the upward trend in prices, some higher-priced online auctions failed to secure buyers. On December 6, one Guxian-based miner in Linfen put 3,000 tonnes of low-sulfur primary coking coal (S 1%, A 11%, GRI 90) on auction, starting at 2,650 yuan/t and completely failed, against the hammer price of 2,575 yuan/t in the last trade on November 29.

 

Another 50-yuan/t price increase was observed in low-sulfur primary coking coal (S 0.5%, GRI 85) in Gujiao, Taiyuan of Shanxi to 2,500 yuan/t, ex-washplant with VAT and in cash. The total price rises in November reached 300 yuan/t. Regional supply faced further shrinkage as safety inspections escalated.

 

In Lingshi, Jinzhong of Shanxi, offers for high-sulfur fat coal (S 1.5-1.8%, GRI 90) stabilized at 2,350 yuan/t, ex-washplant with VAT and in cash.

 

Major miners in Changzhi also held prices of washed meager lean coal (S 0.4%, GRI 10-15) stable at 1,580-1,590 yuan/t, while washed lean coal (S 0.4%, GRI 30) and washed PCI coal (S 0.4%, GRI 0-5) stabilized at 1,790 yuan/t and 1,330-1,350 yuan/t, all on an ex-washplant with VAT basis and in cash. Prices of Qinyuan-based low-sulfur primary coking coal (S 0.5%, A 8.5%, GRI 83) stabilized at 2,500 yuan/t last week. Auctions of premium grades continued the increase.

 

 

On December 8, the Fenwei CCI index for Shanxi low-sulfur primary coking coal was assessed at 2,518 yuan/t, ex-washplant with VAT, up 8 yuan/t from a week ago; the index for Shanxi high-sulfur coal remained unchanged at 2,333 yuan/t.

 

In Inner Mongolia, coking coal prices in Wuhai also stabilized. One large coke producer in the region invited tenders for 1/3 coking coal (S 1%, A 10.5%) on December 4, and prices finalized at the upper limit of 1,868 yuan/t, unchanged from December 2. High-ash low-sulfur fat coal (S 0.8%, A 12) was also traded flat at the ceiling level of 1,856 yuan/t for 10,000 tonnes.

 

In Shandong, the prices of washed gas coal (S 0.5%, GRI 75) stabilized at 1,510-1,520 yuan/t. Local coking coal miners reported balanced production and sales, with limited shipment pressure.

 

 

On December 8, the Fenwei CCI index for Jining gas coal in Shandong was steady from last week at 1,530 yuan/t, ex-washplant with VAT.

 

Import market

Due to adverse weather conditions in the international market, some end-users and traders made purchases, supporting Australian coal prices. The trade price of low-vol hard coking coal translated to around 2,881 yuan/t CFR China with VAT, still higher than domestic prices in China.

 

At spot market, some high-priced offers were adjusted down amid buyers' prudent purchases and loosened prices at some producing areas. Offers of spot Russian low-ash K4 coking coal were 2,350-2,380 yuan/t, ex-stock with VAT, with some offers down 20-30 yuan/t on the week; and Russian Inagli was offered at 1,850-1,880 yuan/t, falling 30-70 yuan/t week on week.

 

The overall clearance of Mongolian coal at Ganqimaodu remained high last week despite a slight decline on December 5 due to customs network outage. The daily clearance volume averaged 1,052 trucks during December 4-7, down by 20 trucks week on week. Last week traders maintained offers firm as short-haul shipping rates continued to rise to a high range. But the downstream showed weak demand and the trading atmosphere was inactive with limited transactions. Spot prices for Mongolian 5# raw coal stabilized at 1,680-1,780 yuan/t, ex-stock Ganqimaodu with VAT.

 

China's Ceke border port let in 786 trucks of Mongolian coal on average each day during December 4-7, down 2 trucks week on week. Washing plants and traders from Shanxi and Inner Mongolia presented higher buying interest for imported Mongolian coal, pushing up local prices. Offer prices for MAK A raw coal rose 20-40 yuan/t week on week to 960-980 yuan/t and MAK West at 1,050-1,080 yuan/t, up 30-60 yuan/t week and week, ex-stock with VAT.

 

Mandula saw a daily average of 279 trucks hauling Mongolian coal pass through during December 4-7, falling 69 trucks week on week. The downstream sector was cautious in purchase given the price tussle between coke and steel producers, and sidelined sentiment prevailed. But traders mostly gave firm offers in anticipation of favorable demand.

 

Forecast

China's coking coal prices are forecast to be stable or even edge up in the short run. While traders mostly showed reluctance in accepting higher prices, logistical constraint resulted from snowy weather and safety checks would, to some extent, curb supply and support prices.