Sxcoal Issue 37# | Further downside in China thermal and coking coal; met coke stable
China thermal and coking coal market continued to move down, while met coke market paused after three price cuts.
Thermal Coal
Portside Market: The portside thermal coal market in China experienced further decline due to weak demand and oversupply. Inventory levels have reached record highs, leading to increased de-stocking pressure and a loss of pricing power for sellers. Coal stocks at major ports increased by 6.6% week on week to 31.01 million tonnes as of November 29. This is 10.9% higher than the same period last year.
Price Trends: The Fenwei CCI index for 5,500 Kcal/kg NAR domestic spot coal was 825 yuan/t FOB northern China ports with VAT, falling 7 yuan/t week on week; the Fenwei CCI 5500 Import index stood at $103/t, CFR southern China ports, rebounding $0.6/t from the previous week.
Market Sentiment: Market sentiment was bearish due to inactive purchases from downstream users and traders, leading to a thicker wait-and-see sentiment in major production areas. A leading miner's downward adjustments of third-party coal buy prices also injected pessimistic sentiment into the market.
Import Market: The import market for thermal coal also saw declines as power utilities refrained from awarding tenders, prompting some traders to lower bidding prices further. Imported thermal coal prices weakened, with major power groups continuing to float tenders for January/February-delivery laycan but not actively buying cargoes.
More details in our latest weekly thermal coal review, incl. our weekly survey on thermal coal mines, market changes and updates on coal consumption in domestream sectors. »CLICK HERE
Coking Coal
Market Overview: China's coking coal market experienced a weakening trend last week due to sluggish steel consumption and a prevailing bearish sentiment. Despite some coking plants increasing coal purchases to mitigate risks associated with snowfall, the overall trading activity remained sluggish. This led to a buildup of stocks at mines and a subsequent decrease in coking coal prices.
Supply and Demand: Coking coal supply tightened slightly as a few mines suspended production due to underground issues, although most mines operated normally. The raw coking coal output at surveyed mines slightly decreased by 0.44% to 9.09 million tonnes in the week ending November 27. The bearish sentiment spread as finished steel prices fell, and some coke producers increased feed coal intake due to falling costs and the onset of colder weather.
Inventory: Coking coal stocks at 100 surveyed coking plants could sustain 6.56 days of usage as of November 27, an increase of 0.22 days from the previous week. Stocks at surveyed mines reached 3.20 million tonnes, up 3.56% on the week, while washed coal stocks increased by 3.40% from a week ago to 2.44 million tonnes.
Prices: Prices for low-sulfur primary coking coal and other grades saw significant reductions, with some dropping by 270 yuan/t from the high levels in October. Prices in various regions such as Luliang, Linfen, Taiyuan, and Jinzhong continued to decline.
Mongolian Coal: Mongolian coal transactions were sluggish, with prices trending downwards further. Prevailing prices for Mongolian 5# raw coal under long-term contracts were around 1,030-1,050 yuan/t, 30 yuan/t lower than the week-ago level, ex-stock Ganqimaodu with VAT. Despite higher coal inflows, border raw coal sales remained weak, leading to a continuous rise in inventories at supervision warehouses.
Seaborne Imports: Australian coal transactions remained sparse last week amid moderate demand. Australian hard coking coal was offered at $200-205/t FOB, translating to about 1,793-1,834 yuan/t CFR China with VAT. Domestic buyers were cautious in purchasing Australian cargoes given higher prices than domestic equivalents.
More details in our latest weekly coking coal review, incl. our weekly survey on coking coal mines, market dynamics, etc. »CLICK HERE
Met Coke
Market Overview: China's metallurgical coke market displayed a temporary stability after three rounds of price cuts totalling 150-165 yuan/t since late October, while still facing downward pricing pressures. Coking plants reported increased profits due to lower feed coal prices, leading to high production outputs.
Production side: Coking plant capacity utilization rose slightly, indicating ongoing operational strength despite some producers reducing output due to unfavorable margins.
Port: Coke prices at eastern transfer ports declined due to stagnant transaction volumes amid falling futures prices. Trader sentiment was bearish as many anticipated further price cuts.
Demand side: Steel mills mainly purchased coke as needed, causing a general lack of stock replenishment across the industry. Steel prices increased marginally but remained low overall, influenced by inconsistent demand and the recent struggle in the construction sector.
More details in our latest weekly met coke review, incl. our weekly survey on coking plants, market dynamics, etc. »CLICK HERE