Coking Coal price fallsSeptember 23, 2008
Coking coal price falls but thermal coal price plateaus in China
It is reported that price for coking coal in China has dropped recently on account of downstream production cuts whilst that for thermal coal mainly maintains stable. Analysts believe coking coal price will hover on a high track despite modest downswings but thermal coal may face seasonal fluctuations.
Despite scarce supply, slumping demand presses coal companies to cut coking coal prices. Prices in Shanxi, Shandong, Anhui, Guizhou and Northeast China have descended. On September 10th 1/3 coking coal price in Ningwu lost CNY 190 per tonne to CNY 1050 per tonne at the mine; cleaned coal in Xiangyuan also decreased by CNY 120 per tonne FOV.
Mr Wang Ye an analyst with Citic Securities said earlier that coking coal price would sag in Sep due to bearish steel industry. Price for primary coking coal may decrease by CNY 300 per tonne to CNY 400 per tonne this year to CNY 1500 per tonne and that for 1/3 coking coal will drop by CNY 300 per tonne. He said that coking coal price would gain some 80% in whole this year since it is a rare variety.
Coking coal price in Shanxi once kept rising in this year, hence downstream coke producers and steelmakers have to raise prices to pass on the additional costs. However, as China's economy expansion decelerates, steel price moves downward due to dull demand. Steelmakers thus suspend productions, launch overhauls, wash out obsolete blast furnaces and reduce steel stocks. These have decreased coke demand and led to declining coke price. Coke producers hence cut outputs on surging costs, which severely whacks demand for coking coal.
Mr Tian Shuhua an analyst with China Galaxy Securities said that Metallurgical coal price stays high in recent years, giving an impetus to coking coal output rocket. Besides, the material is mainly used in steel industry, hence the performance of the latter will greatly influence coking coal price. He said that countries all restrict exports of the rare variety, so there will not be any absolute oversupply.
On the other hand, coal stocks at some transshipment ports in North China as well as ports and power plants in South China all maintain at high tracks. Coal stock at Qinhuangdao Port now is 3 million tonnes more than normal level and is still increasing. Against such a backdrop, prices for coals with low calorific powers slip yet that for high grade thermal coal stays near the ceiling prices.
(Sourced from MySteel.net)
Do we really know what the price of any type of coal will do in these times?