China pays up for coking coal-McCloskey
· Reuters, Thursday June 25 2009
By Steve James
NEW YORK, June 25 (Reuters) - China's steel production is soaring way over estimates and the country has paid above the benchmark price for a shipment of coking coal, which could transform the global market for the key steel-making ingredient, a key coal industry analyst said on Thursday.
"We have just heard of a spot sale from Australia to China of $132 per tonne, which is over the benchmark price of $129," Gerard McCloskey, of the McCloskey Group, told a coal industry conference.
He said if China was buying coking, or metallurgical, coal for over $130 per tonne, "this will herald what will happen the rest of the year." It has become a net importer of the coal since there have been several mine closures in China recently.
In an interview with Reuters, McCloskey said news of China paying over the benchmark price was a first. "We've seen a lot of spot business done lower than that into China -- $105, $115, so this is a major switch.
"China is going to be a major buyer through the year and maybe indefinitely, they seem to have closed up quite a lot of production," he said.
Paying that price shows China is really serious "and underlines their real need and the lack of availability of coking coal in China," McCloskey said.
"Their steel market is going like the clappers (vigorously) and they're importing a lot more iron ore in the last two months -- massive tonnages.
"If it carries on, it's overwhelmingly significant," he said, adding it would transform the whole coking coal market.
The news comes as the global steel industry has started to show early signs of rebounding from the recession that dried up demand late last year, forcing steelmakers to cut production sharply.
Analyst Chris Plummer, managing director of Metal Strategies said that China was on track to produce 540 million tonnes of steel this year -- way above its previous estimate of 465 million tonnes.
"And it does not look like slowing down," he told the Coal USA 2009 conference organized by the McCloskey Group.
McCloskey said that trend was good for coking coal exports, especially to Asia. But, despite robust growth in China and India, he said the general outlook for coking coal remains poor and is "appalling" in North America, Europe and Brazil. (Editing by Marguerita Choy)
Chinese May coal imports hit record 9.43 million tonnes
Monday, 22 Jun 2009
Reuters quoted Custom Data showed that China's coal imports hit an all-time record of 9.43 million tonnes in May.
The figure surpasses the previous record of 9.16 million tonnes set in April, which analysts said was caused by a shutdown of small mines in China as well as thin demand on the international market, coupled with the failure of Chinese power firms to agree on a coal supply deal with domestic miners.
The huge level of shipments, more than twice the 4.16 million tonnes imported in May last year, brings China's coal imports in the first five months of 2009 to 32.2 million tonnes, 73% ahead of imports in the same months of 2008.
The surge in imports in April and May, a leap from previous monthly volumes ranging between 3 million and 6 million tonnes, comes despite a rebound in the cost of freight and a pick-up in coal prices.
Chinese coal remains relatively uncompetitive on the world market, with data released earlier this month showing exports of 1.19 million tonnes in May, the lowest monthly volume in more than 11 years. That puts net imports at 8.24 million tonnes in the month, compared to net exports of 4.6 million tonnes in the whole of last year, turning China from a small seller to a major buyer on the world market.
China meets the vast majority of its coal needs from its own mines, which produce roughly three times as much as is traded on the world seaborne market. But it also buys coal from Australia, Indonesia, Vietnam and Mongolia, and the circle of suppliers widened at the start of this year as shipping costs and global demand slumped.
The Customs data did not give any breakdown of the imports or exports. In the first four months of the year, the coal type showing the biggest increase in imports was coking coal, used by China's huge steel sector, which has continued producing at 2008 levels while most other steel firms have halved output. But most of China's imports are coal grades suitable for power generation, with coking coal making up less than a third of the total.
(Source from Reuters)
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