Mongolian coking coal inflows remain high in China; prices face downside pressure

Daily arrivals of Mongolian coking coal remained at a comparatively high level at China's Ganqimaodu border crossing this week, but trading activities were dull amid a prudent buy stance among coke producers.

Sxcoal's tracking data showed Ganqimaodu let in 623 trucks loaded with Mongolian coal on August 25, reaching the second-highest since November 20, 2020. The daily arrivals during August 22-25 averaged 598 trucks, higher than 570 trucks in the preceding week and the month-to-date average of 550 trucks.

However, offers of the imported coal remained steady at 1,500-1,550 yuan/t, ex-stock Ganqimaodu with VAT, with a downward bias as stocks were accumulating while buyers stayed in wait-and-see sentiment.

"Some traders facing high inventory pressure have slightly lowered offers. The highest settlement was 1,530 yuan/t, but the most-tradable level is currently at 1,500 yuan/t or slightly above," one local source told Sxcoal. However, a deal of inferior-quality coal was concluded at 1,450 yuan/t, he added.

A second source offered Mongolian raw coking coal at 1,550 yuan/t, but few trades were concluded lately, as bids were much lower.

The thin buying interests came along with the weakened sentiment in the coke market as several producers cut coke prices further, mills' replenishment declined, and coke stocks piled up.

Sxcoal data showed the combined coke stocks of the surveyed coke firms increased by as much as 21.6% week on week on August 25, following three weeks of decline.

Coke firms were not inclined to build stocks to high levels as increasing participants foresaw that the downstream steel market may not be that strong this year in the traditional peak period over September and October.

Domestic coking coal prices remained range-bound, and there were still some auctions that failed to fully conclude.

One major state-run coke firm in Inner Mongolia issued a buy tender for 10,000 tonnes of 1/3 coking coal (S 1.0%, A 10.5%) with a ceiling price of 1,692 yuan/t, delivered basis with VAT, but the price level was not accepted by bidders.

The firm successfully bought 10,000 tonnes of low-sulfur fat coal (S 0.8%, A 12%) at 1,720 yuan/t, down 22 yuan/t compared with the preceding day, Sxcoal learned.

Sxcoal surveyed 20 coking coal firms on August 26, and all of them held prices unchanged, waiting for further clues before making a price adjustment.

Some cities in China's top coking coal production area of Shanxi reported new COVID-19 flare-ups and restrictions on transportation were accordingly tightened regionally.

Sxcoal learned road delivery was temporarily stopped in a few counties but railway transportation remained generally normal. Miners tentatively expected the impact to be small and the controls are unlikely to last long.

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