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Chinese coking coal futures slumped more than 6% on Monday to their lowest in three months as stable output and imports eased supply worries, while demand for the ingredient appeared promising on strong steel production.
The previous surge in coking coal prices was partly due to tight imports, but that has stabilized with adjustments to the import structure such as ramping up of purchases from Mongolia, said Liu Xinwei, chief researcher with Sublime China Information.
Meanwhile, domestic production has also stayed relatively abundant as many mines did not have holidays for the Chinese new year due to coronavirus-related restrictions, Huatai Futures said in a note.
The most-traded coking coal futures on the Dalian Commodity Exchange, for May delivery, fell as much as 6.5% to 1,387 yuan ($214.60) per tonne and closed down 5.5% at 1,402 yuan, the lowest since Nov.23, 2020.
Coke futures on the Dalian bourse slumped 3.2% to 2,478 yuan a tonne.
Despite lower prices, analysts are still optimistic about demand for the steelmaking raw materials as utilisation rates at steel mills’ blast furnaces are high while the downstream sector is entering peak season.
FUNDAMENTALS
* Benchmark iron ore futures on the Dalian exchange dipped 0.8% to 1,133 yuan per tonne.
* Spot iron ore with 62% iron content for delivery to China rose by $1 to $175.5 per tonne on Friday, according to SteelHome consultancy.
* Steel rebar on the Shanghai Futures Exchange, used in the construction sector, declined 0.7% to 4,639 yuan a tonne.
* Hot-rolled coil slid 0.9% to 4,841 yuan per tonne.
* Shanghai stainless steel, for April delivery, edged down 0.8% to 15,105 yuan a tonne.
* China’s factory activity expanded at the slowest pace in nine months in February as weak overseas demand and coronavirus flare-ups weighed on output, adding pressure on the country’s labour market, a business survey showed on Monday.
Source: Reuters