Coking coal prices were underpinned by tight supply in Shanxi, one key production base in China, showed a survey organized by sxcoal.com and Liulin Chamber of Commerce on April 10.
"We have no stocks of raw and washed coking coal," said a large producer in Liulin, Shanxi. "We mainly sell coal to end-user customers including Taiyuan Iron and Steel Group and Baotou Iron and Steel Group, but they are cash-strapped."
The source said his company planned to tap market in Rizhao, Shandong this year through Wari (Watang, Shanxi – Rizhao, Shandong) railway.
The head of Liulin Chamber of Commerce said sales of primary coking coal were satisfactory in Liulin, as supply lagged behind demand.
Local coal authority conducted inspection and ordered unqualified mines to halt production for rectification, which may affect local coking coal supply.
Coal mines in Liulin have maintained slow production since last year and mainly focused on ensuring safe and stable production.
Local coal washing plants were little impacted by environment check, and 26 independent coal washing plants have all passed the check.
Some steel producers have increased buying of Mongolian primary coking coal while reducing that of Liulin primary coking coal since early this year. Reportedly Baotou Iron and Steel Group has slashed purchase of Liulin low-sulfur primary coking coal by 20 yuan/t since March.
One miner in Liulin said his mine was safety-compliant and maintained normal production despite safety check. Coking coal prices may be rising in the short run, but in the long term the outlook remains gloomy.
Recent cyclone in Australia caused a supply shortage in the international market, also boosting market confidence in China. And an improving coke market also indicated continued demand for coking coal.
Under strict environment check, coke producers in Xiaoyi, Shanxi limited production by 30%, and those in Zibo and Heze kept operating rate at 50-60%. As coke supply is seen to shrink further, an upturn could be expected in coke market across China.
The Fenwei CCI Met index assessed ex-washplant price of Liulin low-sulfur primary coking coal at 1,360 yuan/t with VAT on April 11, stable week on week; and that of Liulin high-sulfur at 1,145 yuan/t on the same day, up 5 yuan/t over the week.
(Writing by Jessie Jia Editing by Harry Huo)
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