MYSTEEL: China's met coal prices seen softening further in April
China's met coal market decelerated throughout March, tracking the weakness of met coke prices, the report pointed out. Last month, domestic steelmakers had repeatedly pressed independent coke firms to cut their coke sales prices, in the hope of making up for their losses from the retreat in steel prices.
As a result, independent coke firms accepted three price reductions during March and conceded Yuan 300-330/tonne ($41.5-45.6/t) in total, as Mysteel Global had reported.
The damaging reduction in coke prices – and the resultant escalation of their losses – led the coke makers to intensify their production cutbacks. This in turn weakened their appetite for feed coal replenishment, sources observed.
As such, coking coal suppliers had no choice but to pare their offers to promote sales, which resulted in the prices of various coking coal grades broadly declining last month.
For example, the price of low-sulphur primary coking coal produced in Anze county, North China's Shanxi province under Mysteel's assessment had decreased by a large Yuan 500/t during March, while the assessed prices of fat coal produced in Shanxi's Linshi also lost Yuan 400/t, the report noted.
As of March 29, China's national composite coking coal price assessed by Mysteel had slumped by a whopping Yuan 384.9/t on month to settle at Yuan 1,605.5/t, the lowest since late-July 2023.
Looking to April, the feeble demand for coking coal is likely to persist as there are few signs emerging of any significant turnaround in steel consumption, the report stated.
It also mentioned that supplies of domestic coking coal have been constrained by closer monitoring of production at mines in North China's Shanxi province by local regulators aimed at tackling overproduction.
Mysteel's data showed that over March 21-27, the daily output of raw coal at the 523 coking coal mines surveyed nationwide had increased by a marginal 0.2% on month to reach 1.9 million tonnes/day. More importantly, the volume was lower by a marked 15% when compared with the year-earlier level.
The rigorous inspections of mining operations by local governments causing disruptions to production would usually serve to boost coking coal prices, the report notes, but currently demand is so weak that the tightening of supply is having little impact and so prices are more likely to soften this month.
Coking coal inventories also remain an issue. The steadily mounting stocks of coking coal held by the 523 sampled mines had pressured the miners to accept lower quotations tabled by buyers. As of March 38, their coking coal inventories had risen for the sixth straight week to 3.08 million tonnes, a nine-month high, Mysteel's data show.
In conclusion, the report suggested that supply and demand of domestic coking coal will remain weak in April, but the negative impact of weak demand will prevail and weigh on prices.
Written by Irene Zhuang, zhuangailing@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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