Chinese domestic offer prices of washed coking coal have fallen in all production regions of the country after Shandong and Hebei reduced their prices this week.
The price adjustment is due to weakened demand from coking plants, which are struggling to maintain normal operation amid aggravating sales, and steel mills, which have to implement strict production restrictions for environmental concerns.
From November 15, much tougher restrictions will touch the steel industry with the onset of winter heating season. Steel mills should cut 50% of their production capacity in Shijiazhuang, Tangshan, Handan in Hebei, and Henan's Anyang.
Traders accordingly anticipated the coking coal market to remain sluggish in the short run.
A Hebei-based miner reported price slumps of their all washed coking coals, and worried the upcoming restriction on steel sector would be implemented seriously.
"How sharply the washed coking coal prices will fall is largely reliant on the implementation," he said. "I'm afraid they will take it seriously just like before."
A source from Changzhi-based mine acknowledged poor sales right now, adding they couldn't receive new orders at 1,500 yuan/t ex-washplant basis with VAT for coal with 8% ash, 17% VM, 0.5% sulfur, GRI 75 and Y12, which was for the former contracts.
Environmental inspections also required washing and coking plants to cut production. Given the current situation, they are happy to do it, at least don't feel bothered as before.
"Power supply has been halted for many washing plants in Linfen city," a local coal washing plant source said. "It doesn't matter as they had huge amount of stockpiles that can't sell out."
A Luliang coke producer reported 50% capacity curtailment at present, which was mainly attributed to loss-making situation. "You may also come across surprise inspections sometimes," he added.
"We buy coking coal in accordance with our consumption," he said. Allowing for their profitability and production situation, his words can be read as they didn't have plans to buy the coking material, at least for the near term.
(Writing by Alex Guo Editing by Tammy Yang)
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