Sxcoal Issue 49# | China's thermal market rebounds; coking coal and met coke still bearish
China's thermal coal market rebounded late last week, while coking coal and met coke markets still face downside risk...
Thermal coal prices in China are expected to rise near-term due to tighter supply and higher demand, though significant stockpiles and seaborne prices may limit gains, while coking coal faces downward pressure as steel and coke producers curb purchases amid proposed coke price cuts.
Thermal Coal
Portside Market: China's portside thermal coal market experienced a rebound last week, driven by increasing buyer interest. This shift was also partly due to reduced cost-effectiveness of seaborne cargoes amid uncertainties over Indonesia's HBA policy. However, the rebound may be short-lived due to high inventories at ports like Qinhuangdao, Jingtang, and Caofeidian, which reached 29.5 million tonnes on March 7, a 7.78% increase week on week.
Price Trends: On March 7, the CCI index for 5,500 Kcal/kg NAR domestic spot coal was 691 yuan/t FOB northern China ports, down 8 yuan/t week on week. The CCI 5,500 Import index rose $2.0/t to $85.0/t CFR southern China ports.
Market Sentiment: Market sentiment improved as buyers shifted towards domestic supplies due to uncertainties in the import market. Increased procurement by non-power users, such as chemical plants, and tighter supply due to safety checks and weather conditions also supported prices. However, the overall market outlook remains cautious due to high stock levels at ports and power plants, which could limit further price increases.
Import Market: The import market saw a rebound in prices for both low- and high-CV grades as domestic prices improved and utilities issued tenders. However, major power groups continued to tender for seaborne coal, indicating a lower-than-expected impact of the HBA policy on demand.
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 saw minor fluctuations last week, with prices trending downward due to prevailing pessimism impacted by tepid end-user demand, lack of macroeconomic catalysts, and limited purchasing by coking plants.
Supply and Demand: Supply remained relatively stable as most mines operated normally during the "Two Sessions", with raw coking coal output at surveyed mines slightly decreasing by 0.08% week on week. However, demand was weak due to production cuts at steel mills and coking plants, driven by stringent environmental checks and persistent losses.
Inventory: Coking coal inventories further fell at coal mines. Raw coking coal stocks at surveyed mines declined by 1.39% week-on-week to 4.26 million tonnes, while washed coal stocks decreased by 0.63% to 4.75 million tonnes. Coking plants maintained low feed coal inventories, with stocks sufficient for 6.67 days of usage as of March 5.
Prices: Prices weakened across major regions. In Shanxi, Linfen low-sulfur primary coking coal dropped 10 yuan/t to 1,300 yuan/t. In Inner Mongolia, prices for mid- and high-sulfur coking coal remained unchanged, but underlying weakness persisted due to coking plants' reluctance to procure amid losses. In Shandong, washed gas coal fell by 50 yuan/t to 970 yuan/t, with cumulative declines reaching 130 yuan/t post-Chinese New Year.
Mongolian Coal: Mongolian coal imports remained sluggish due to the closure of major border crossings during Mongolia's White Moon Festival and Women's Day. Daily customs clearance at Ganqimaodu border port averaged 705 trucks over March 3-6, down 85 trucks week on week. Traders gradually lowered offers due to weak demand and high inventory levels at supervision warehouses.
Seaborne Imports: Overseas end users continued to buy as needed, suppressing far-month coal trades and Australian coal prices. Australian low-vol hard coking coal traded at $184/t on March 6, down $3/t week on week, translating to about 1,639 yuan/t CFR China with VAT. Spot prices for Australian low-vol hard coking coal remained range-bound at 1,440-1,460 yuan/t.
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 coking plants experienced a decline in coke stocks last week due to supply contraction and the resumption of blast furnaces at steel mills. However, the overall market outlook remained weak and participants expected further coke price cuts in the coming weeks due to persistent weak demand and high coke supply.
Production side: Coke production in Tangshan, Hebei, was limited by stricter safety checks and environmental requirements during the "Two Sessions". Other producers also reduced output due to losses and low coke prices. This led to a shrink of supply in major production areas. Coke-making losses slightly eased due to softened coking coal prices and stable coke prices, but improvement was limited.
Port: Some coking plants faced inventory pressure due to unsmooth dispatches and diverted stocks to eastern transfer ports. Coke prices in the main producing regions remained stable, but steelmakers have not fully restarted blast furnaces. Speculative traders undersold cargoes at ports in anticipation of potential coke price cuts.
Demand side: Coke inventories at steel mills continued to decline due to ongoing consumption and lack of restocking demand. The capacity utilization of surveyed mills rose to 79.5% as of March 7. Steel prices moved lower during the past week, with domestic and imported iron ore prices decreasing.
More details in our latest weekly met coke review, incl. our weekly survey on coking plants, market dynamics, etc. »CLICK HERE
The above updates are also available in our newsletter China Coal Weekly, which provides in-depth analysis and commentaries, as well as market highlights in coal and related industries.
Meanwhile, our Weekly EXCEL Supplement keeps you updated on the CCI Thermal and Coking Coal, Met Coke indexes, prices at main production areas and transfer ports, key weekly and monthly statistical data on coal and related industries (production, stocks, import & exports, etc.).
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