Production area Safety inspection was intensified in Shaanxi ahead of the National Games to be held in Xi'an city during September 15-27. Coal mines in Yuyang district are to be suspended for 3-5 days, which may compound coal supply shortage in the short run. Chemical and coking plants and traders at rail stations showed strong buying appetite amid increasing winter storage demand, bolstering prices at production areas on supply shortage. Miners reckoned that current supply-demand fundamentals will continue to support prices. But some clients showed reluctance toward current high prices amid price-capping policies. Attentions should be paid to the implementation of supply-boosting and price-capping policies.
Northern port Spot cargoes embraced good demand, and prices rose higher. Some traders said that it was hard to secure cargoes amid improved profitability and red-hot market at production areas, further pushing up prices in spot market.
Import market Offer prices of import seaborne cargoes were in chaos, and transactions were done at various prices. The import prices generally went upward, which promoted some traders to stop chasing for higher profit or hold back on sales for fear of price slump.
Coking coal supply was still in tightness, as environmental inspection and overproduction checks limited the production increase at production areas, and coking coal imports remained insufficient. As such, prices went up further. On September 12, Fenwei CCI index for Shanxi low-sulfur primary coking coal was 4,410 yuan/t, ex-washplant with VAT, 2,654 yuan/t higher than the lowest level of this year. The ever-high prices incurred policy intervention, which fanned wait-and-see stance among participants.
Ganqimaodu border crossing has been shut for four days due to severe pandemic situations, whether it will reopen tomorrow depends on the result of infection tests done on truck drivers. Mongolian 5# raw coking coal was offered at 3,100-3,150 yuan/t, ex-stock Ganqimaodu with VAT, and cargoes were in severe shortage.
The tenth round of price hike was finalized, with accumulative growth at 1,360 yuan/t since early August. The heated market sentiment was cooled by the reduced capacity utilization of blast furnaces amid upcoming production cut of crude steel and slump of coke futures. Prices of coke are estimated to increase further, as coke stocks at steel mills were at low or critically low level. Some speculative traders worried about a price slump from present highs and emptied their stocks promoted by low or no profitability.
(Writing by Lilya Li Editing by Tammy Yang)
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