China's PCI coal market held steady last week with some regions seeing increased prices, backed by coke price rise and reasonable demand from steel mills. But the generally cautious sentiment added pressure to the market.

 

On December 7, Fenwei CCI index for Changzhi PCI coal (A 11.5%, V 12, S 0.5%) and Jincheng PCI coal (A 11%, V 10, S 0.5%) was 1,270 yuan/t and 1,257 yuan/t respectively, ex-washplant with VAT, flat compared to the week-ago levels.

 

Fenwei assessed the Yangquan PCI coal (A 10%, V 8, S 0.6%) in Shanxi at 1,392 yuan/t, unchanged from a week earlier; the assessment for Jiaozuo PCI coal (A 12%, V 7, S 0.3%) in Henan was at 1,457 yuan/t, also unchanged.

 

The proposal of the third round coke price hike and steelmakers' winter storage demand somewhat boosted the PCI coal prices. Several miners reported smooth sales.

 

However, against the backdrop of a traditional lull season of steel consumption, steel producers mostly adopted a wait-and-see approach with escalating maintenance of blast furnaces.

 

On December 8, one Changzhi-based miner in Shanxi put 44,000 tonnes of raw PCI coal (A 26%, V 14, S 0.5%) on auction at 950 yuan/t. Cargoes were fully concluded at 950-955 yuan/t, against 975-977 yuan/t in the last trade on December 6 starting from 975 yuan/t.

 

On December 4, an auction of 40,000 tonnes of raw PCI coal (A 26%, V 14, S 0.5%) in Changzhi was settled at 989-1,001 yuan/t for all from the starting price of 975 yuan/t. The miner's last session started at the same bidding price on November 24, with partial cargoes being sold at the same price.

 

In the downstream sector, steel mills maintained moderate production enthusiasm due to the seasonal downturn of steel market and low profitability. Seasonal maintenance undertaken by some mills resulted in declined operation of the blast furnace, leading to a continued decrease in molten iron production.

 

Data showed the price of Shanghai HRB 400 rebar (20 mm) stood at 4,070 yuan/t on December 12, up 50 yuan/t from the week-ago level, and Shanghai hot-rolled coil (3.0 mm) rose 110 yuan/t to 4,140 yuan/t. Tangshan Q235 billet price increased 90 yuan/t from last week to 3,710 yuan/t.

 

The near-term PCI coal prices may continue to stabilize with marginal fluctuations, as some low-stocked steelmakers have accepted the third round of coke price hike, supporting the prices. However, poor profit margins and output contractions at mills could drag down the market.