Sxcoal Issue 39# | China domestic and import thermal coal prices plummet; coking coal dips; coke in 4th drop
China's coal and coke markets continued to decline last week. Can we anticipate a slowdown in the decline or even stabilization this week?
Thermal Coal
Portside Market: Thermal coal prices at northern China ports experienced a rapid price decline last week, as sellers aimed to secure orders and alleviate inventory pressure. Buyers, however, maintained a firm stance in negotiations due to ample stocks at ports and end-user side. The overall coal inventory at Qinhuangdao, Jingtang, and Caofeidian ports decreased by 4.64% week on week to 26.11 million tonnes late last week, which however, increased by 2.41% month on month.
Price Trends: The Fenwei CCI index for 5,500 Kcal/kg NAR domestic spot coal was 799 yuan/t FOB northern China ports with VAT, falling 19 yuan/t week on week; the Fenwei CCI 5500 Import index stood at $96.0/t, CFR southern China ports, down $5.2/t from the previous week.
Market Sentiment: A leading Chinese coal miner initiated a sixth consecutive price cut, slashing its buy prices for third-party coal from production areas by 10-13 yuan/t on December 10 and further by 15-20 yuan/t on December 13. This has prompted more miners to follow suit, fueling bearish sentiment in the market.
Import Market: Imported thermal coal prices were dragged down by a diminished appetite from Chinese major power utilities. Utilities preferred low-priced supplies and remained inactive in locking in cargoes. High coal inventory refrained power plants from actively seeking imported sources, with stocks held by power plants under six Chinese coastal power groups able to cover 17 days of usage late last week.
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: The Chinese coking coal market showed further signs of weakness due to cautious sentiment. Despite overall stability last week, underlying weaknesses persisted, with ample supply and reduced purchasing interest from downstream buyers following the fourth coke price cut, leading to constrained offtakes and price pressure.
Supply and Demand: Coking coal supply remained high, with most mines operating normally. However, some mines capped output due to year-end factors like mining accidents or completion of annual production tasks. Demand remained tepid, with coking plants only making essential purchases and middlemen staying on the sidelines.
Inventory: Coking coal stocks at surveyed coking plants increased to sustain 7.69 days of usage last week, up 0.51 days from the previous week. Mines also reported a rough sales-production balance or slight destocking, but high-priced cargoes struggled to find buyers, leading to stockpiling at some mines.
Prices: Prices trended downwards in most parts of Shanxi. The market in Shandong also saw downward trends. On December 13, the Fenwei CCI index for Shanxi low-sulfur primary coking coal was assessed at 1,540 yuan/t, ex-washplant with VAT, down 8 yuan/t week on week.
Mongolian Coal: Sliding coke prices further depressed downstream buying interest at Ganqimaodu border port. Transactions stagnated at Ceke border port, with continuous stock rises at supervision warehouses.
Seaborne Imports: Australian hard coking coal cargoes sold to Indian buyers at $224.5-225/t CFR India, which could translate to about 1,850 yuan/t CFR China, still higher than domestic coal. Spot prices for Australian hard coking coal at north China ports declined 20-50 yuan/t from the previous week.
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: The Chinese metallurgical coke market suffered its fourth consecutive price reduction, as leading coke producers agreed to the price cut requested by steelmakers. This decision was driven by the persistently weak steel market conditions that continue to suppress coke demand and market sentiment.
Production side: Coking plants in China reported reduced profits following the fourth price cuts, with some even starting to suffer losses. Sxcoal's survey of 100 coking plants showed an average profit of 39 yuan/t, a decrease of 34 yuan/t from the previous week. Despite this, most producers maintained high production levels, with the capacity utilization of surveyed coking plants at 81.93%, a slight decrease of 0.19 percentage points.
Port: Coke prices at eastern transfer ports in China showed an upward trend following the fourth price cut in main production areas. This was due to easing bearish sentiment and increased buying interest from downstream buyers, improved by positive expectations and growths in futures prices. However, the transactions were lackluster due to weak reactions to politburo meeting policies and lower cargo availability.
Demand side: Steel prices rose earlier in the week but declined by the end of the week, mirroring the trajectory of futures prices. The Chinese government's commitment to stabilizing the real estate market and promoting a new real estate development model is expected to provide some support to the steel market. Additionally, China's auto production and sales hit new highs in November, with year-on-year increases of 11.1% and 11.7%, respectively.
More details in our latest weekly met coke review, incl. our weekly survey on coking plants, market dynamics, etc. »CLICK HERE