Coal news and updates

Coking Coal and Coke Futures Dipped Over 4% on Firm Government Regulation

Following National Development and Reform Commission (NDRC)’s voice emphasising the stability of coal prices yesterday, the NDRC took action again today, planning to carry out survey concerning coal production costs. Coking coal and coke futures continued to dip today on this news. As of 14:10 Beijing time, coking coal was down 3.53% at 2,530 yuan/mt and coke was down 3.44% at 3,320 yuan/mt.

At the same time, the coal stocks also moved downward. As of midday close, the coal stocks growth narrowed to 0.6%, and nearly half of the shares fell.

On the news front, the National Development and Reform Commission Price Division, the Price-Cost Survey Centre convened a meeting with provincial Development and Reform Commission from Shanxi, Shaanxi, Inner Mongolia as well as relevant coal production enterprises, industry associations to prepare for the 2021 annual coal production cost survey work. The meeting required that the relevant authorities and enterprises should attach great importance to the work of coal production cost survey, in strict accordance with the requirements of the “coal production cost survey program”, and relevant data and information shall be submitted in a timely manner with guarantee on accuracy and authenticity.

On the fundamentals, the prices of coking coal were lowered to a low level and downstream enterprises began to restock modestly. And the recent online auction abortion was rarely heard, and coking coal stocks carried by coal mines rose slowly. However, the coal transaction remains poor, and online auction prices are also low. Coking companies and steel mills purchase only on demand. Hence the market bearish sentiment still exists.

On the supply side, coking enterprises basically maintain normal production, and their coke stocks are low. But coking enterprises are about to suffer losses as coke prices will drop for the fourth round following the first three rounds. On the demand side, steel prices have dropped and steel mills have been forced to cut the production as their profit margins have narrowed, resulting in lower demand for coke.

To sum up, the impact of the current round of pandemic is still not negligible. As the National Development and Reform Commission vowed to increase the monitoring of coal prices, the market sentiment is generally pessimistic. At the same time, steel mills generally purchase on demand, and some mills still have the intention to force down coke prices. However, coking enterprises’ profits are poor, and are increasingly reluctant to lower the prices.`