Coal news and updates

The Steel Index’s premium hard coking coal index advanced $1.7 to $197 a tonne on Thursday, consolidating recent gains.

 

Since the start of July the price of the steel-making ingredient has more than doubled as Chinese traders and mills have chased cargoes in the seaborne market. Those gains have made coking coal the best performing commodity of 2016, reports Neil Hume in London.

 

China has increased imports of the raw material after policymakers in Beijing ordered a reduction in the working week of the entire domestic coal mines. This is aimed at improving the industry’s profitability so that it can repay loans and free up China’s banks to lend to other parts of the economy.

 

The effects of the policy change were first felt in the much larger thermal coal market but have spread to coking coal. Thermal coal is used to generate electricity in power stations.

 

Trading was light on Thursday with few traders active because of the mid-autumn holiday in China. But some reckon the coking coal market could tighten further and move above $200 a tonne.

 

Glencore on Thursday said has delayed some coking coal shipments after a train derailment in Australia’s Queensland, while the effect of a force majeure at the Ilawara coking coal mine in New South South Wales is still reverberating through the market, said traders.

 

Industry watchers said recent mine closures in the US and Canada and cost cutting in Australia – which had seen many producers high-grading, or digging up their best reserves – had made the coking coal market less flexible and able to respond to an increase in demand.

 

China’s imports of coking coal in the first seven months of the year have risen 11.8 per cent to 31.5 tonnes.

 

Coking coal is used to heat iron ore during steel-making.

Source: Financial Times