China's domestic PCI coal market continued its weak performance in the week ending December 19, as a bearish market outlook still weighed on trading activities.

On December 19, the CCI index for Changzhi PCI coal (A 11.5%, V 12, S 0.5%) dropped 10 yuan/t from last week to 920 yuan/t, ex-washplant with VAT.

Sxcoal assessed Yangquan PCI coal (A 10%, V 8, S 0.6%) in Shanxi at 1,008 yuan/t on the same day, down 11 yuan/t from a week prior; the assessment for Jiaozuo PCI coal (A 12%, V 7, S 0.3%) in Henan was 1,055 yuan/t, declining 11 yuan/t from the preceding week.

Last week, intensified maintenance at downstream steel mills led to a further decline in molten iron output, suppressing essential demand for PCI coal.

Meanwhile, coke prices were expected to drop further due to the emerging requests for the third round of reductions. This, coupled with the overall downward trend in coking coal and thermal coal prices, posed downside pressures on PCI coal prices. As a result, wait-and-see sentiment prevailed in the market, prompting buyers to exercise caution in coal procurement.

Finished steel demand remained sluggish during the shoulder season. However, market sentiment received a temporary boost from several positive factors, including calls for combating cut-throat competition, heavy pollution alerts issued in multiple regions fueling potential supply tightness, Indonesia's plan to impose a duty on coal exports, and the rollout of documents on clean and efficient coal utilization. 

Data showed the price of Shanghai HRB 400 rebar (20 mm) stood at 3,300 yuan/t on December 19, growing 30 yuan/t from a week ago, and that of Shanghai hot-rolled coil (3.0 mm) also hit 3,300 yuan/t, up 30 yuan/t week on week. Tangshan Q235 billet price was 2950 yuan/t, jumping 10 yuan/t from the previous week.

Although these developments provided some support to finished steel prices, steel mills still faced weak fundamentals and poor profitability, thus scheduling more maintenance to blast furnaces, which led to decreased molten iron output and hurt PCI coal demand.

Looking ahead, headwinds in China's PCI coal market may still exist in the short term, as a sustained pessimistic outlook is likely to dampen buying appetite among end users and middlemen.