I Reviews on Chinese domestic coal market for October 10-16, 2020

1.1 Coking Coal Market

Price of coking coal rose by 20-40 yuan/t; that on a long-term contracted basis from large mines was stable; that in coal mines which fluctuated with the market in part of Shandong, Shanxi, Shaanxi and Jiangsu increased by 20-40 yuan/t.

Price of coking coal from some local coal mines in Shandong went up by 30-40 yuan, total growth reaching 80-100 yuan.

Price of low-sulfur coking coal (Mt14) from several coal mines in Linfen, Shanxi rose by 20 yuan, 80-yuan up since price hike.

Currently, coking plants in main production area are in stable production and ship quickly. Premium coking coal is on great demand, price of which is also increasing.

It’s expected that coking coal price will pick up this week.

Quotation of Australian coking coal fell. Price of I grade coking coal dropped by $12.5 to $131.5-132.5 per ton; that of standard I grade coal declined by $12.5 to $122-124.5 per ton; that of II grade coking coal dipped by $4 to $117-118 per ton.

Price of Mongolian raw coking coal (5#) at ports rose by 10-20 yuan to 830-840 yuan/t (in cash), and that with high ash was 805 yuan/t (in cash), monthly increase reaching 20-30 yuan; that of clean coking coal at ports rose by 10 yuan to 1010-1040 yuan/t.

Table 1: China Coking Coal Price for October 10-16, 2020 (yuan per ton)

1.2 PCI market

Price of domestic PCI on a long-term contracted basis from large mines mainly increased by 30 yuan/t; that of PCI from local coal mines in Changzhi, Shanxi was stable at 680-750 yuan/t (in cash, ex-works).

Price of PCI at ports in East China increased by 20-30 yuan. Short inventory at ports can not be eased in a short term. Meanwhile, some coal mines at origin mainly focused on thermal coal, thus PCI supply decreased. It’s expected that PCI price will stay at a high level.

Purchase price by steel mills was stable after increases, and that of several steel mills went up and down.

A few steel mill in Tangshan, Hebei called for bids on PCI. Price of PCI bituminous dropped by 25 yuan to 710 yuan (in cash, delivered to mills); that of anthracite rose by 10 yuan to 930 yuan/t (in cash, delivered to mills).

Monthly demand of 70 steel mills on anthracite kept at 3.641mn t; inventory decreased by 22,000 to 2.145mn t; available days dropped by 0.2 day to 17.7 days.

Table 2: China PCI Price for October 10-16, 2020 (yuan per ton)

1.3 Thermal Coal Market

Price hike of thermal coal slowed down. After holiday, transactions decreased and traders were more willing to ship affected by fluctuations in imports market.

Inventory at ports was low. Low-sulfur coal was in shortage, giving firm support to coal price.

Price at pitheads was at a high level. Production in Shaanxi and Inner Mongolia increased to ensure sufficient supply. Sales of thermal coal in Ordos transported on road kept at 1.35mn t and above.

Bidding price at origin from large mines declined.

It’s expected that thermal coal price this week will stay at a high level.

It’s expected that growth of thermal coal price at ports will slow down while that at origin will be at a high level.

Table 3: China Thermal Coal Price for October 10-16, 2020 (yuan per ton)

II Market news

u In September, Indonesia exported 24.73mn t of coal, down 32.17% year on year from 36.461mn t of coal last year and falling 0.53% from 24.8628 in August. Indonesia coal exports fell for three consecutive months.

◆ Vietnam coal exports during January-September reached 574,600 t, falling 26.6% from 783,000 t; exports achieved 78,5006mn dollars, down 33.6% from 118mn dollars last year.

III Inventory at coking coal inventory

Coking coal inventory in domestic independent coking plants picked up, falling by 0.21% this week.

Capacity utilization rate of 100 coking plants monitored by SteelHome was 89.54%, down by 0.5%; that of some coking plants in East China and Central South China dipped due to overhaul.

Given that environmental control was getting stricter, coking plants slowed down its replenishment rate. Last week, coking coal inventory decreased and available days increased.

As of October 15, coking coal inventory of 100 independent coking plants was 7.71mn t, up 423,500 t or 5.81% from 2019 average and up 13.99% from last year.

Table 4: Coking Coal and Coke Inventory in China Independent Coking Plants for October 10-16, 2020

IV Ocean freight

The international shipping price index kept falling. As of October 15, the dry bulk freight index BDI of the Baltic Trade Shipping Exchange reached 1561 points, falling 331 points or 17.49% from the 1892 points on October 9.

At present, the sea freight from Brazil to China is 18.07 yuan/t (Cape of Good Hope); the sea freight from Western Australia to China is $7.8 per ton (Cape of Good Hope); and India to China is $12.95 per ton (Handy).

The domestic seaborne coal freight index turned upwards. As of October 13, the freight index closed at 796.1 points, an increase of 61.04 points compared with September 29 and up 8.3% month-on-month.

V In the following week, focus on:

1) changes in Mongolian coal customs clearance volume.

2) changes in steel mills and coke market and production limitation in autumn and winter;

3) coal mine safety inspections.

4) changes in spot goods at ports.

Positive factors: 1) Mongolian coal customs clearance volume was at a high level, giving a shock to domestic coking coal; 2) Purchase was impacted by production limitation in autumn and winter.

Negative factors: 1) Coking plants and steel mills are active in replenishing stock, showing strong demand on purchasing; 2) Several coking plants put forward the fifth round of coke price hike; 3) Some types of coking coal was in shortage, which can not be eased in a short time.