China's coking coal market kicked off this week with a weak bias, as more online auctions traded lower or failed to reach a deal amid the still pending fourth round of coke price increase.

 

The auction market presented divided results between the backbone and common grades. On December 18, one auction of 30,000 tonnes of mid-sulfur lean coal (S 1.3%, A 10%, GRI 60) in Zhongyang, Luliang of Shanxi, settled lower from 1,970-2,020 yuan/t to 1,860-1,940 yuan/t, while starting bids remained the same at 1,850 yuan/t.

 

On the same day, one miner in Qingxu county put 20,000 tonnes of low-sulfur washed lean coal (S 0.6%, A 12.5%, GRI 35) for auction with the starting price of 1,650 yuan/t, but all failed to reach deals. The miner's previous auction for the same coal grade was also aborted, but at 1,700 yuan/t, Sxcoal understood.

 

However, premium coal grades still kept quite strong strength due to tightly-supplied status quo. Supply of such coal grades remained tight in the wake of a series of mine accidents.

 

Sources expected spot offers for premium grades are unlikely to soften in the near term, especially after another coal mine accident happened in Changzhi, Shanxi, on December 17 and got one man killed.

 

Sxcoal learned all mines and washing plants in Lishi were informed to suspend operations firstly for three days since December 17, and the decision on resumptions depends on later discussions. This put around 10 million tonnes per annum of production capacity into suspension.

 

"The government has to do something at a time when mine accidents occurred more frequently than ever to contain this down, and I learned the suspension is very likely to last until December 31," said one local trader source.

 

On December 18, the CCI indexes for Shanxi low-sulfur primary coking coal stayed flat day on day at 2,568 yuan/t, while mid- and low-sulfur primary coking coal both unchanged at 2,340 yuan/t and 2,323 yuan/t, respectively.

 

The Mongolian coal imports continued to face hurdles from extreme weather and energy shortage in the country. Daily coal trucks passed Ganqimaodu border crossing were at 552 and 662 trucks on December 15 and 16, far lower than above 1,000 trucks in the previous week.

 

Daily coal deliveries via routes from Tsagaan Khad to Ganqimaodu have dropped from 140,000 tonnes to 70,000 tonnes, and are likely to keep falling, while there still are 3 million tonnes or plus of coal needed to be transported so far.

 

"Coal production at Mongolian coal mining companies has dropped quite clearly due to the shortage of gasoline. Despite crude oil imports from China, which are not used for the mining end, coal production may decline further and impact coal prices," said one large coal trading company at Ganqimaodu.

 

Mongolian 5# raw coking coal offer prices were around 1,650-1,680 yuan/t presently, ex-stock with VAT.