Chinese coking coal market kept firming up in the last few months of 2020, recovering from low ebbs earlier in the year, with the average price moving down from 2019. Will 2021 witness a bullish run of the coking coal market?
The average price of Shanxi low-sulfur primary coking coal was 1,369 yuan/t in 2020, ex-washplant basis with VAT, diving down 198 yuan/t or 12.6% from average level of 2019, according to Fenwei CCI index. The CCI index for Shanxi high-sulfur primary coking coal averaged 1,043 yuan/t in the year, down 108 yuan/t or 9.4% year on year.
In full-year of 2020, Shanxi low-sulfur primary coking coal hit a trough of 1,268 yuan/t, 91 yuan/t lower than the low record in 2019, while it peaked at 1,556 yuan/t, dwarfed by a high level of 1,715 yuan/t in 2019, showed the Fenwei CCI index.
The peak and low points of Shanxi high-sulfur primary coking coal were 1,151 yuan/t and 992 yuan/t, both falling down 49 yuan/t and 95 yuan/t from 2019 corresponding levels.
Over January-March last year, coking coal prices moved downward alongside market panic in the wake of the COVID-19 pandemic outbreak. Later in April-August, prices softened despite rising coke prices, as domestic coking coal supply was sufficient thanks to rapid resumption of coal mines.
Strong price rebounds were observed during September-December last year, thanks to resilient downstream demand, domestic coal shortage caused by frequent safety inspections, China's sustained ban on Australian coal imports and Mongolia's interrupted coal shipments amid re-emerging coronavirus cases.
Looking back at 2020, the outbreak of the COVID-19 pandemic at the beginning of the year caused a severe blow to the global economy. Encouragingly, the Chinese economy showed strong resilience, and recovered rapidly after a short-term decline. Since June, China's steel demand has maintained a high growth, and monthly crude steel and pig iron outputs hit fresh highs.
In the context of de-capacity campaign, China's coke production continued being constrained, suppressing coking coal consumption. In the meantime, after the coal industry completed the de-capacity task, the release of new capacity has accelerated, and domestic coking coal supply capacity has enhanced. Despite staged supply deficit brought by strict curbs on imported coal, the supply of coking coal was relatively loose throughout the year, and the average prices moved down.
Entering January 2021, most coal miners were normal production, and environmental measures' impact on road transport faded, leading to declines of mines' coal stockpiles.
Prices of primary coking coal stayed at high levels amid sizzling demand from end users, while blending coal market also embraced price rises thanks to increased restocking. Coke producers' persistent good appetites mainly stemmed from worries over supply issues caused by interrupted road transport and their high profit margins after 13 rounds of price hikes.
Coal producers at main production areas are expected to further ensure supply while guaranteeing safety in the short run, and Mongolian coal shipments may fluctuate due to multiple factors, while coke plants could possibly continue replenishing coal cargoes. So coking coal prices are likely to move up further.
Will the year of 2021 witness extended strength in the coking coal market? Fenwei's research report 2020 China Coking Coal Market Study and 2021 Outlook reviews and interprets important policies affecting the coal industry operation especially coking coal market in 2020, and also provides detailed analysis and forecast in 2021 centering on policy environment, demand, production, supply, price, import & export, etc.
The report incorporates abundant data, figures and technical parameters in clear analytic logics and viewpoints, which will be valuable reference for market participants to understand development trend of China's coking coal industry.
(Writing by Tammy Yang Editing by Alex Guo)
For any questions, please contact us by email@example.com or +86-351-7219322.