The Mongolian coking coal market showed little sign of decisive upward momentum at major Chinese border crossings last week, as fragile demand and persistent pressure on downstream markets undermined any gains prompted by rising futures prices.

Despite modest price adjustments, actual transactions remained thin, with traders facing sluggish buying interest and mounting inventories at the ports. Compounding the situation were the implementation of the third coke price cut earlier last week and expectations of additional price declines.

Market dynamics

Ganqimaodu Futures prices edged upward during the week, prompting slight increases in trader offers for Mongolian coal at Ganqimaodu port. However, tepid inquiries and a general lack of enthusiasm from downstream buyers left trading activity subdued. Many traders struggled to offload cargoes.

On December 26, Ganqimaodu Mongolian 5# raw coking coal was around 980 yuan/t, up 3 yuan/t compared to the week-ago level, ex-stock with VAT, while Jinquan Mongolian 5# washed coal was up 30 yuan/t to 1,170 yuan/t.

During December 22-27, there were 1,440 coal trucks cleared customs averagely each day, down 6.1% from the daily average over December 15-20 yet still at a high level. The clearance volume at the port set new single-day records again during the period.

High clearance volumes and bleak demand continued to drive portside inventories up. As of December 28, coal stocks at Ganqimaodu supervision warehouses stood at 3.89 million tonnes, up 6.0% week on week and marking a nine-week sequential increase, Sxcoal's tracking data showed.

Meanwhile, the short-haul trucking rates from Tsagaan Khad to Ganqimaodu came in at 70 yuan/t exclusive of VAT on December 26, down 20 yuan/t from a week ago, as per Sxcoal data.

Ceke and Mandula Many Mongolian coal miners cut back output ahead of New Year's Day, with some halting truck loading already. The resulting short-term supply decline did little to lift sentiment at Ceke port, as the broader Chinese coal market remained weak. Buyers continued to purchase only on a need-to basis, and while some traders opted to hold prices firm due to cost constraints, actual deals were limited.

As of December 26, the prices of MAK A and MAK West raw coal were around 530 yuan/t and 630 yuan/t, respectively, both steady from a week ago, ex-stock Ceke with VAT. South Gobi A raw coal stood stable on the week at 630 yuan/t.

Ceke's daily truck clearance averaged 766 during December 22-27, a 0.4% uptick compared to the week-ago average.

Mandula port saw elevated customs clearance levels last week, but most shipments were thermal coal. Tepid buying and cooling sentiment weighed on portside Mongolian coal prices.

On December 26, the price for washed primary coking coal was unchanged week on week at 790 yuan/t, ex-stock Mandula with VAT. The daily average of Mandula customs clearances decreased 3.3% week on week to 323 trucks over December 22-25.

Mongolian coking coal e-auctions

A total of 819,200 tonnes of coking coal was listed for auction on the Mongolian Stock Exchange over December 22-26, with an unsold rate of 39%.

Energy Resources LLC, an indirect wholly-owned subsidiary of Mongolian Mining Corporation, put 38,400 tonnes of Mongolian 3# washed hard coking coal (S 0.85%, A 11%, GRI 75) for sale in three auctions over the past week, each at 12,800 tonnes.

The miner successfully concluded the auctions at an average hammer price of 850 yuan/t, DAP Ganqimaodu and exclusive of Chinese VAT, up 20 yuan/t from the week-ago average, with a starting price of 800 yuan/t.

Erdenes Tavantolgoi JSC (ETT) put 512,000 tonnes of 1/3 coking coal for sale in five auctions, and 192,000 tonnes of cargo settled at $68.4/t DAP Ganqimaodu and exclusive of VAT. Yet the other three auctions were aborted. ETT fully sold 256,000-tonne 5# washed coking coal (S 0.85%, A 10.5%, GRI 80) at $132.2/t on average, while its washed semi-soft coking coal was traded at $98.7/t, up $2.5/t from December 10.

Forecast

With a fresh round of coke price cuts initiated by some steel mills at the start of this week, downstream demand for raw materials is likely to be further suppressed, casting a shadow over imported Mongolian coking coal prices in the near term.