China's coking coal prices drop to near 1.5-year lows

• Market sources expect prices to bottom out soon

  
  
  

• Mills' thinning profits may keep trades subdued
  
  

Mysteel Global: Following about six weeks of declines, Chinese coking coal prices continued their downtrend on Monday, with the national composite coking coal price under Mysteel's assessment dipping by RMB 0.6/tonne (t) ($0.08/t) from Friday to RMB 1,399.6/t, including 13% VAT, hitting a new low since mid-June 2023.

Sources shared that prices of certain coal variants have essentially touched their historical lows, implying that the risk of further steep price drops may ease in the days ahead. Mysteel learnt that a few coal grades witnessed better sales after their prices fell to record lows.

However, the market remained bearish yesterday. Participants feared that coking coal transactions may continue to be lacklustre, as end-users still need to control their production costs in the face of thinning profits.

Meanwhile, the softened derivative market for the commodity raised more concerns over the spot coking coal market in the short run. For example, the most-traded coking coal contract for January 2025 delivery on the Dalian Commodity Exchange shed a marked 2.38% to close Monday's daytime trading session at RMB 1,273/t.

On the other hand, spot prices of coking coal may face further downward pressures if mills demand a new round of cuts this week. This could dim the outlook for both coal and coke markets, according to market insiders.

A total of 273,000 t of domestic coking coal cargoes were successfully booked in the auction market on Monday. However, 31.4% of the total offered cargoes remained unsold, widening from 26.1% logged on Friday, according to Mysteel's tracking data.

In North China's Shanxi, some coal deals were concluded with d-o-d drops of RMB 3-83/t on Monday, while most prices remained stable. In Tangshan city in North China's Hebei province, prices of 1.1%-sulphur fat coal and 0.9%-sulphur primary coking coal both lost RMB 10/t d-o-d to RMB 1,610/t and RMB 1,685/t, respectively, on exw basis with VAT.

Meanwhile, Chinese end-buyers showed tepid interest in booking forward coking coal cargoes from Australia and Russia on Monday, as they have slowed their own production amid declining confidence and fading profitability. Coking coal traders largely adopted a cautious attitude in buying new cargoes, predicting that overseas prices would fall further in the short term, sources disclosed.

At Chinese ports, trades of spot imported coking coal remained slow, with sparse inquiries from both end-users and traders. As such, port traders later reduced their offers slightly to boost sales.

Mongolian coking coal transactions remained listless at major Sino-Mongolian border ports yesterday, reflecting Chinese downstream users' extended prudence over material purchases, given that they plan to bring down input costs.