China's coking coal prices continued to see divergence on December 19, as premium grades gained more support from accident-induced supply shrink, while common grades showed signs of softening on subdued demand from coke firms.

 

On December 19, the CCI index for Shanxi low-sulfur primary coking coal surged 62 yuan/t from the day before to 2,630 yuan/t, while mid- and low-sulfur primary coking coal indexes both unchanged at 2,340 yuan/t and 2,323 yuan/t, respectively.

 

A series of fatal mine accidents happened in Shanxi, the most important and largest coking coal region in China, in recent days, with fatalities no less than five. Local safety watchdog therefore enhanced safety inspections.

 

Sxcoal understood all private mines in Lishi, Luliang of Shanxi, were requested to halt operations for at least three days since December 17, while a few mines are expected to remain suspended till the start of 2024, impacting around 10 million tonnes per annum of production capacity.

 

This, combined with required suspensions following previous incidents, resulted in supply tightness of backbone coal grades and price divergence between this grade and common ones.

 

On December 19, one main miner in Gujiao of Taiyuan revised up offer prices of low-sulfur primary coking coal (S 0.5%, GRI 85) by another 50 yuan/t to 2,600 yuan/t, ex-washplant with VAT and in cash, adding accumulative growth in December at 100 yuan/t and 400 yuan/t since November.

 

"It's hard to purchase primary coking coal at 2,650 yuan/t presently, and as far as I know, no other seller is willing to sell at such price. I assume coal miners are likely to hold prices firm until Spring Festival holidays," one Shanxi-based coke firm mainly consumed primary coking coal noted.

 

"Prices of premium coal grades still have space for further increases, while we plan to hold blending coal prices stable for a while first and find out market directions," a coal miner based in Shandong said.

 

The emerging downsides in the coke market did not bode well for coking coal market, several sources disclosed.

 

Coking plants mostly maintained previous capacity utilization rates, while some moderately lifted output as declined blending coal prices reduced their production costs.

 

However, steel mills concentratedly started blast furnace maintenance in response to the decline in the finished steel prices, leading to continued drops of molten iron production and retreated coke demand.

 

To avoid any bigger losses, some coking plants in Inner Mongolia have secretly cut prices to seek quicker sales. Coke stocks have built up at some plants as traders also eased purchases, several trader sources confirmed with Sxcoal.