China's metallurgical coal and coke markets experienced weak demand on December 26, as purchases from the downstream steel industry were capped by meager profit margins and production halts.

 

Despite a modest profit rally following steel products price rebounds in November, most steel companies still operated with severe losses. Sxcoal learned Tangshan billet suffered a loss of 200 yuan/t, while rebar bore the loss surpassing 100 yuan/t.

 

This, combined with air pollution alerts in many places in northern China and facility maintenance during the current slack season, pushed more steel companies to spontaneously stop operations of blast furnaces.

 

In Hebei, China's largest steel-producing province, Shijiazhuang city issued a red alert for heavy air pollution on December 25 and implemented a series of response measures, including restrictions on vehicles, potentially limiting logistics turnover.

 

In addition, industrial enterprises are requested to implement emission reduction requirements.

 

"Some steel companies with sufficient stocks have already started to control coke arrivals, slowing down coke destocking from coking plants," said one Shanxi-based coke company, noting there might be the first coke price cut next week.

 

However, coke stocks held by coking plants didn't increase substantially as a result, since coke production was also impacted by environmental protection measures, with capacity utilization rates down marginally in some regions, Sxcoal understood.

 

The downsides have passed onto the upstream market. But with improved traffic conditions, some coke producers started replenishment for winter storage and bolstered coking coal trading activities slightly.

 

The failed online auctions decreased clearly from the past two weeks, but no obvious improvement was seen in hammer prices.

 

On December 26, one auction for 4,000-tonne low-sulfur primary coking coal (S 0.7%, A 11%, G 90) in Luliang, Shanxi was settled at 2,595 yuan/t after starting from 2,500 yuan/t, while the miner's previous trade was concluded at 2,640 yuan/t, with the starting bid set at 2,450 yuan/t.

 

The CCI index for Shanxi low-sulfur primary coking coal remained unchanged from the day-ago level at 2,630 yuan/t on December 26, while mid- and high-sulfur primary coking coal indexes both declined by 30 yuan/t from a day ago to 2,310 yuan/t and 2,293 yuan/t, respectively.

 

Mongolian coal market

Imported Mongolian coal prices further lost steam partly as shipping fee from Tsagaan Khad to Ganqimaodu slumped to only 160 yuan/t on December 25, compared with 300-400 yuan/t a week ago, mainly owing to slowed discharging efficiency amid cold air.

 

Prices of #5 raw coal under long-term contract fell to 1,600-1,630 yuan/t at China's largest border crossing Ganqimaodu, ex-stock with VAT.