China: Dalian coking coal futures edge down on subdued demand outlook

Chinese coking coal futures decreased as much as 3% on Tuesday, 17 Aug'21, amid expectations of shrinking demand from steel mills and coking plants, while supply-side shortages were expected to recover.

China's crude steel output fell for a second straight month in Jul'21, down 7.6% m-o-m to 86.79 million tonnes (mn t), as the country aims to reduce carbon emissions by reducing steel production.

Intensifying output controls at coking plants in northwest and central China could also hurt consumption for coking coal, according to industry analysts.

Meanwhile, as Beijing has recently stepped up efforts to boost coal supply and stabilize commodity prices, supply for coking coal blending could be improved.

The most traded coking coal futures on the Dalian Commodity Exchange DJMcv1, for January delivery, was down by as much as 3.0% to CNY 2,157/t ($332.93/t). They fell 1.3% to CNY 2,195/t as of 03:30 GMT.

Coke futures DCJcv1 on the Dalian bourse edged down 0.8% to CNY 2,902/t.

Resurgent pandemic induces supply worries for coking coal, coke in China

Earlier this month, a recent coronavirus outbreak in the country had sparked supply concerns for the steelmaking raw materials.

In early-Aug'21, China reported the most new locally transmitted Covid-19 cases since Jan'21 as some cities stepped up restrictions, curtailed flights and increased testing to contain the outbreak driven mainly by the Delta variant.

The redeveloping coronavirus situation had been affecting the turnover rate of met coke and arrivals at steel mills.

The renewed upsurge in the pandemic situation is likely to affect the turnover rate of coke and arrivals at mills, apart from prices thereof. The recent outbreak might also delay coking coal transportation.

Furthermore, air pollution control measures are still affecting production and underpinning prices for domestically produced met coke in China.

The latest price of domestic met coke, with 12.5% ash content, in north China is assessed at CNY 2,970/t ($466.31/t), up CNY 170/t ($25.63/t) w-o-w.