China's coking coal prices continued their upward trend last week, albeit at a slower pace. The market sentiment stabilized, resulting in subdued transactions for high-priced resources. However, expectations suggest that near-term coking coal prices could further increase in line with the third coke price rally.

 

The Index

The CR China Coking Coal Price Index (CRCP) was 1,961.1 yuan/t on April 29, up 2.54% week on week. The CR China Coking Coal Stock Index (CRCS) was 67.1 points, ticking up 1.05% from a week ago.

 

 

Lately in the market

Coking coal output ramped up in response to decent offtakes and production resumption. Raw coking coal output at Sxcoal-surveyed mines increased 72,700 tonnes from a week ago to 8.47 million tonnes in the week ending April 25. The overall capacity utilization at these mines came in at 83.91%, up 0.46 percentage point week on week.

 

Improved profitability encouraged low-stocked coking plants to accelerate their restocking efforts, resulting in increased inventories as more shipments of coking coal arrived. Coking coal stocks at Sxcoal-surveyed coking plants reached 6.68 days of use as of April 25, up 0.8 day on the week.

 

Coking coal miners continued to see inventories decline, as traders and washing plants actively purchased the material. Restocking by coke and steel producers also played a part. Raw coal stocks at surveyed mines stood at 2.23 million tonnes as of April 25, reducing 394,600 tonnes, and washed coal stocks dropped to 1.63 million tonnes, down 326,900 tonnes week on week.

 

Coking coal prices remained robust in Shanxi, but exhibited varying trends in different regions.

 

In Luliang, coking plants were enthusiastic in purchases, favoring the price rallies in coking coal. Local low-sulfur primary coking coal (A 10.5% S 0.8% GRI 95) increased 71 yuan/t to 2,100 yuan/t on April 25.

 

End buyers slowed down purchases in Linfen, impacted by previous rapid price increases. While prices for low-sulfur primary coking coal (S 0.5% GRI 80-85) kept flat at 2,000 yuan/t during the week, certain primary and lean coking coal grades rose further by 100 yuan/t.

 

In Taiyuan, mines with low output that had been slow to adjust prices increased prices for low-sulfur primary coking coal (S 0.5% GRI 85) by 50 yuan/t to 1,970 yuan/t, totally rising 170 yuan/t in April. Traders stated to sell in anticipation of potential downside risks.

 

Safety inspections hampered coking coal output in Jinzhong. Downstream procurement supported local high-sulfur fat coal (S 1.5-1.8% GRI 90) to rise 50 yuan/t to 1,900 yuan/t, which represented a total increase of 300 yuan/t in the month. However, end buyers exercised caution in purchasing high-priced resources, resulting in stable offers and varied online settlements.

 

Prevailing offers in Changzhi were stable during the week amid moderate offtakes. Major miners offered washed PCI coal (S 0.4% GRI 0-5) at 1,130-1,150 yuan/t, while prices of washed meager lean coal (S 0.4% GRI 10-15) were 1,250-1,290 yuan/t.

 

On April 26, the Fenwei CCI index for Shanxi low-sulfur primary coking coal was assessed at 2,000 yuan/t, ex-washplant with VAT, 54 yuan/t higher than a week ago; the index for Shanxi high-sulfur coal increased 207 yuan/t to 1,812 yuan/t.

 

 

Inner Mongolia's coking coal prices stayed firm. Miners reported no inventory pressure thanks to decent offtakes, motivating them to offer higher prices. High-ash and low-sulfur (S 0.8% A 12%) was concluded at 1,670 yuan/t on April 25, 60 yuan/t higher than on April 16, while prices for high-ash fat coal (S 1.0% A 15%) jumped 70 yuan/t from April 16 to 1,430 yuan/t.

 

In Shandong, the cost-effectiveness of local gas coal emerged due to slower price increases. Major miners raised washed gas coal prices by 30 yuan/t and expressed confidence in further price increases.

 

Import market

Rising Chinese domestic futures prices spilled over into imported coal transactions. Australian coal demand moderately recovered, pushing up trading prices. Australian hard coking coal was traded at $260/t FOB, up $8/t from the low early last week, or 2,209 yuan/t CFR with VAT. Limited demand and ample supply, however, may hinder the upward momentum.

 

Spot transactions at northern China ports calmed down, as end buyers were not eager to make deals at high prices. Traders adopted wait-and-see approach, pressing down coking coal prices. Offers of spot Russian low-ash K4 coking coal were flat at 1,850 yuan/t, ex-stock with VAT; Russian Inagli was offered at 1,670-1,720 yuan/t, declining 30-40 yuan/t on the week.

 

Mongolian coal inflows declined at the Ganqimaodu border port during the week, and inventory pressure remained high at supervision warehouses. The daily clearance averaged 895 trucks over April 22-25, down 150 trucks week on week.

 

Mongolian coal trading activity languished amid downstream buyers' resistance to surging prices. Some traders offered lower prices to boost sales. Prevailing settled prices for Mongolian 5# raw coal amounted to 1,350-1,380 yuan/t during the week, with a few deals reaching 1,400 yuan/t, up 20-30 yuan/t week on week, ex-stock Ganqimaodu with VAT.

 

Coal arrivals fell by 41 trucks at Ceke border port, averaging 591 trucks each day over April 22-25. Washing plants and traders scaled down purchases, and prices were stable for various grades. MAK A raw coal was stable at 930-950 yuan/t, while MAK West was at 960-980 yuan/t, ex-stock with VAT.

 

Mandula port saw an average of Mongolian coal 294 trucks clear customs every day over the period, up 68 trucks from a week ago. Trading activity improved, and most traders opted to raise offer prices in anticipation of further price increases after the third coke price hike.

 

Forecast

China's coking coal market is forecast to be relatively stable this week, and transactions on high-priced cargoes may further slow down. Low stocks and decent pre-sold orders may encourage miners to stay firm on offering prices. Coke and steel producers that lifted output may continue to boost deliveries of coking coal from mines, providing support to the near-term market.