China's coking coal and coke futures prices slumped on March 14, partly as supply was on track to recover with the conclusion of the "Two Sessions" while no significant support has been seen so far on the demand side.

On March 14, the most-traded coking coal futures on the Dalian Commodity Exchange closed the daytime trading at 1,968 yuan/t, down 1.20%.

Supply of coking coal is expected to improve, as some coal mines have started to resume or ramp up production alongside the loosening environmental and safety requirements after the end of the annual political gathering.

Yet this could be dent participants' confidence at a time when demand still showed limited signs of improvement, as coke firms continued to shun high-priced cargoes and be quite cautious in restocking due to thin cokemaking margins.

The lower settlements or even failures of online auctions at coal mines in Shanxi partly corroborated the prudence in the market.

On March 14, one auction for 20,000 tonnes of mid-sulfur primary coking coal (S 1.1%, A 11%, G 79) in Luliang of Shanxi was concluded at 2,065-2,070 yuan/t, down from 2,155-2,160 yuan/t on March 7, while the starting price of the two auctions was unchanged at 1,850 yuan/t, Sxcoal understood.

Complete failure was also seen in some auctions as high prices continued to hold back buying interests. One auction of 5,000 tonnes of low-sulfur primary coking coal (S 0.7%, A 11%, G 90) in Luliang did not fetch a result on March 14 even after the miner lowered the starting price to 2,350 yuan/t from 2,450 yuan/t on March 8.

Sxcoal-surveyed coal mines in Zichang of Shaanxi basically restarted normal production on March 14. "The previously-halted coal mines have resumed production, but as sales are lukewarm on the whole, miners have to cut prices by 100 yuan/t one after another to avoid being priced out of the market," said one source with a local mine in Shaanxi. Offers of washed gas coal (S 0.5%, G 85) are generally at 1,700-1,750 yuan/t after reduction, ex-washplant with VAT and in cash.

In the coke sector, the most-active coke futures on the bourse was down 1.94% to 2,860.5 yuan/t on March 14.

Coke inventories held by coking plants fell to low-to-medium levels, but mills remained in no hurry to restock with their inventories at medium-to-high levels. They also expected supply to increase, as some coke firms have been lifting production with eased environmental checks.

The call for the first round of 100-110 yuan/t coke price hike gradually faded away following a half-month standoff since coke firms proposed the rise late last month.

Softening coking coal prices were also a reason for mills' reluctance on accepting the price hike.

The overall coking coal and coke markets still lacked solid demand support from the steel sector, even though steel production was rebounding and steel product prices continued to move up.

China's two leading steel-consuming sectors – construction and auto – continued to see development difficulties due to various reasons.

Construction activities of the real estate sector remained slow due to high dept issues of developers despite multiple stimulus measures unveiled last year. Many unfinished housing continued to hinder buying interests for new houses.

China's auto sales improved in February, yet the accumulative sales during the first two months remained 15.2% lower compared with the same period in 2022.

Some auto companies are looking to reduce prices to spur sales and the local governments are also mulling over policies to incentivize demand, yet they all take time to implement and show effect.