Sxcoal Issue 16# | China's thermal and coking coal on the downside
China's thermal and coking coal markets stepped onto a downward track, mainly owing to extended weakness of demand...
China's thermal and coking coal markets are on the downward trajectory, mainly owing to extended weakness of demand, though specific drivers behind varied. While thermal coal is in seasonal lull, coking coal has lost favor in its traditonal bull season. All together it boils down to the slower-than-expected economic recovery.
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Coking coal
It would be safe to say the good old days for coking coal has gone, at least in the foreseeable future. Chinese domestic coking coal market will hardly repeat the all-time highs seen in the golden demand months of Sep-Oct 2021 when extreme tightness of supply met with the government’s drive to guarantee supply for power generation.
Since Apr, coking coal prices have dropped more than 200 yuan/t ($29/t), with low-sulfur premium coking coal assessed by Sxcoal down to 2,150 yuan/t from close to 2,400 yuan/t in late Mar.
The fast drop resulted mainly from lacklustre demand from coking plants that produce met coke for steel production. Actually, met coke prices have also dropped 100-200 yuan/t since Apr, ending an impasse with steel mills since the Chinese New Year.
This would definitely impact dynamics in China’s imports of the steelmaking material. Mongolian coking coal have also declined nearly $30/t at the largest border port of Ganqimaodu, while prices of Australian down $22/t on CFR N. China basis.
There has been less positives pop up in the downstream market of steel products. Industry insiders generally are bearish toward the coking coal-coke-steel industry chain fundamentals in China.
For your reference, we’ve put all the presentations (10 in total) shared at the Global Coking Coal Market Summit held March 30 onto YOUTUBE. We’d be happy to hear your take on the market going foreward.
Here’s a list of presentations for quick access:
2023 outlook for major assets allocation
Current situation in coal mining and export in Mongolia
China’s coal industry development status quo & trend
China’s steel industry overview and 2023 outlook
China coking industry operation and outlook under dual carbon goals
Coking coal supply-demand analysis and outlook
Reasonable utilization of evaluation indicators to control & improve quality of feedstock coking coal
Australian coking coal imports analysis and outlook
Potential risks in Shanxi coking coal industry
Analysis of deliverable resources potential after the change of coking coal futures contract
Thermal coal
China’s thermal coal market was also on fast declines, both in production areas and northern ports, as demand from power plants and other sectors continued to slide, despite the month-long maintenance to coal-dedicated Daqin railway.
Sxcoal data showed domestic 5,500 Kcal/kg NAR coal traded at Qinhuangdao port has dropped 60 yuan/t or so from late Mar, with the latest assessment at only 1,030 yuan/t FOB with VAT on Apr 11.
Prices of same-quality thermal coal traded at major production areas in northern China (e.g. Datong in Shanxi, Ordos in Inner Mongolia) fell by the similar extent.
There are near-term factors impacting the market, like the seasonal weakness of demand. While high level of coal production and strong hydropower output are likely to sustain, the still slow recovery of industrial activity would be the main concern.
Over the medium or even long term, the thermal coal market still requires more scrutiny from both macro and micro levels. How should we interpret the Chinese policies to stabilize the economy after the "Two Sessions"? What impacts of these policies would have on China’s domestic and international coal market? Where would the coal market head for?
We have invited industry experts to share insights at the upcoming Global Thermal Coal Market Summit to be held in Qinhuangdao, Hebei province over Apr 19-20.
Join us for more expert views and discussions on the thermal coal market. You can also attend VIRTUALLY.
