China's coking coal market awaits direction, 1st coke price rise to materialise this week

China's coking coal market awaits new direction clues amid a lack of sustained strength, as coking plants are still curbing output in response to weak margins.

On August 8, Fenwei CCI index for Shanxi low-sulfur primary coking coal stood at 2,245 yuan/t, and the index for high-sulfur primary coking coal at 1,785 yuan/t, ex-washplant with VAT, both unchanged compared with the preceding session.

Some coking coal miners saw sales rebound as the previous significant price cuts spurred buying interests of coking plants that sought to increase production to meeting rebounding coke dispatches to mills.

However, there were still some miners reporting soft demand and buyers' cautious stance. "Washing plants only place demand orders after they have received orders from customers. Miners' sales have indeed improved but not significantly," said one Luliang-based miner in Shanxi.

"Coking plants are moderately replenishing stocks to meet production needs as their sales to mills continue growing. But the loss-making status and production cuts still restrain coke firms' procurement for the feed coal to some extent," said one source with a Linfen-based mine in Shanxi.

The wave of purchases from coke firms has fueled the rebound of some coking coal prices that had fallen aggressively in July.

On August 7, one large coke firm in Inner Mongolia bought 20,000 tonnes of 1/3 coking coal (S 1.0%, A 10.5%) and 20,000 tonnes of low-sulfur coal (S 0.8%, A 12%) both at 1,750 yuan/t, rising 150 yuan/t respectively compared with the levels on August 1.

Some miners in Shanxi also saw their prices stabilize after rebounding by 100-150 yuan/t compared with late July or early August. "The sustainability of the uptrend of demand would remain to be seen, considering coke firms may not continue building coal stocks when they still don't make profit," said one Changzhi-based miner in Shanxi.

In the downstream market, one leading steel firm in Shandong has agreed to increase coke buy prices by 200-240 yuan/t at the start of the week, adding to the likelihood that the first round of coke price hike would materialize within the week.

Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.