China's domestic PCI coal market continued its weak trend in the week ending December 26, as buyers still exercised caution in procurement, leaving little room for any upward momentum.

On December 26, the CCI index for Changzhi PCI coal (A 11.5%, V 12, S 0.5%) dropped 35 yuan/t from last week to 885 yuan/t, ex-washplant with VAT.

Sxcoal assessed Yangquan PCI coal (A 10%, V 8, S 0.6%) in Shanxi at 970 yuan/t on the same day, down 38 yuan/t from a week prior; the assessment for Jiaozuo PCI coal (A 12%, V 7, S 0.3%) in Henan was 1,015 yuan/t, declining 40 yuan/t from the preceding week.

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

Meanwhile, the third round of coke prices reduction was implemented, with expectations of further declines. This, coupled with downward trend in thermal prices, posed downside pressures on PCI coal prices. These factors collectively fostered a wait-and-see sentiment in the market.

Steelmakers found some macroeconomic tailwinds last week, with finished steel prices trending upward slightly.

Data showed the price of Shanghai HRB 400 rebar (20 mm) stood at 3,310 yuan/t on December 26, growing 10 yuan/t from a week ago, and that of Shanghai hot-rolled coil (3.0 mm) also hit 3,310 yuan/t, keeping flat week on week. Tangshan Q235 billet price was 2950 yuan/t, remaining unchanged from the previous week.

However, end-user demand for steel was subdued during the shoulder season, leading to tepid market transactions. Lacking solid cost support, the steel prices lacked further upward momentum.

In the coming week, China's PCI coal market is expected to see sustained weakness, given bearish sentiment and limited signs of improvement in spot activities.