Excess supply, waning demand to pressure coking coal prices in China

sxcoal.com Viewpoint,  Price,  Coking Coal 2019-09-30 19:33:44

China's coking coal price will probably edge lower next year on concerns of surplus supply and falling demand from steel and coke sectors, Chinese coal consultant Fenwei Energy Information Services predicted.

 

Average price of premium coking coal is expected to fall to 1590 yuan/t in 2020, down from 1620 yuan/t this year, forecast Chang Yijun, president of Fenwei Energy, at an industry conference in Ulaanbaatar, Mongolia on September 27.

 

The forecast is based VAT-included ex-washplant price of low-sulfur washed coking coal (CSR 65%) produced in Liulin, Shanxi province.

 

Fenwei CCI index for Liulin low-sulfur coking coal averaged 1,627 yuan/t this year to September 27, ex-washplant with VAT, 32 yuan/t higher than the same period last year

 

"For the rest of year, if without anything uncontrollable, the supply-demand fundamentals will be roughly the same, so we consider the price curve won't appear big fluctuations," he said.

 

Coal production started picking up from June following frequent checks in the first half year. In the first eight months, China's raw coal production reached 2.41 billion tonnes, up 4.5% year on year, Chang cited data of the National Bureau of Statistics as saying.

 

The upward trend would be kept in the rest months, and the full-year production will grow over 4.5%, he said. He expected production to exceed 3.85 billion tonnes in 2020, in which washed coking coal production will reach 520 million tonnes, up 3.6% year on year.

 

For the demand side, he said the overall demand showed a clear increase driven by high production of steel and coke after the country announced to adopt more flexible measures to control air pollution.

 

He, however, noted Chinese steel mill margins have badly shrunk this year due to supply glut as well as rising iron ore prices, which in turn pressured coke consumption and offset part of growth in coking coal prices. Most listed firms reported substantial slowdowns in profit growth in their interim reports.

 

In January-August, the country's crude steel production rose 9.1% year on year to 660 million tonnes; pig iron output totaled 540 million tonnes, up 6.9% year on year; coke production increased 6.7% year on year to 310 million tonnes, the NBS data showed.

 

"In the fourth quarter and 2020, growth of real estate and infrastructure investment will further slow down, giving limited help to drive up steel demand. Steel production and consumption will begin to top out next year," Chang said. "Accordingly, demand of coking coal will fall."

 

He forecast crude steel output at 970 million tonnes this year, up 4.5% year on year; pig iron at 800 million tonnes, up 3%; coking coal consumption at 544 million tonnes, up 3.5%.

 

Chang also talked about the policy changes on the coke industry. He pointed out cities in the Beijing-Tianjin-Hebei region and Fenwei Plain started to "fix coke capacity in line with steel production".

 

Shanxi aims to cut coke production capacity by about 40 million tonnes per annum (Mtpa) in 2019-20, to control its total coke capacity within 147.68 Mtpa, according to a document issued by the provincial government on August 12.

 

While the move is a significant part for the province's de-capacity drive, Chang reckoned it wouldn't exert substantial effect on coke output in the province, which only produced 92.56 million tonnes of coke last year.

 

In Jiangsu's Xuzhou, compared with a large scale shutdown in 2018, local coke production has gradually recovered this year through great efforts on environmental upgrading.

 

Fenwei analysts have been closely tracking the Chinese domestic and import market, presenting in-depth analysis and insights in the well-received newsletters Fenwei Coal Weekly Update, China Thermal Coal Market Monthly Report, and China Coking Coal Market Monthly Report.

 

Contact us for subscription details at +86-351-7219322 or email inquiry@fwenergy.com.


(Writing by Alex Guo  Editing by Harry Huo)
For any questions, please contact us by inqury@fwenergy.com or +86-351-7219322.

Share this article
Connect with us

Editors Recommendations

1 Chinese thermal coal traders under inventory pressure, fueling downside concerns 2019-10-15

Traders engaged in spot thermal coal business at northern China transfer ports came under mounting inventory pressure, anxious about further price falls as market sources said port authorities may tak

2 China coal import curb fears not growing despite high import figures 2019-10-15

Fears of China's possible coal import restrictions, which daunted the import market for months, did not grow further although September import figures remained strong. Data from Chinese c

3 Weekly China coking coal market analysis and forecast 2019-10-15

Coking coal market further softened at main production regions in China during the past week. Coal miners slashed prices of low- and high-sulfur primary coking coals in face of rather sluggish demand

4 China Sep iron ore imports surge to 20-mth high on firm demand 2019-10-15

China's iron ore imports rose for a third straight month in September to a 20-month high, according to customs data released on October 14, fueled by firm demand at steel mills and stable shipments fr

5 Weekly China met. coke market analysis and forecast 2019-10-15

China's met. coke market stayed largely unchanged last week, with no more progress being made after some producers proposed for price hikes. Since the National Day holidays, coke production has gra

6 Weekly China thermal coal market analysis and forecast 2019-10-15

China's thermal coal market showed signs of strain in the past week, as supply was recovering with output curbs eased at mines after the National Day holiday and demand remained at a low ebb.

7 Weekly steel news summary (Oct 8-Oct 12) 2019-10-14

Nippon Steel to shut typhoon-damaged Kimitsu plant until end-Dec Japan's biggest steelmaker, Nippon Steel Corp., said on October 3 one of the two steelmaking plants at its Kimitsu Steel Works wi

8 China's natural gas imports rise 7.8% YoY in Sep; zest to grow 2019-10-14

Chinese customs data showed a solid year-on-year growth of 7.8% in its natural gas imports in September, primarily spurred by China's continued efforts in coal-to-gas/electricity switch for heating sy

9 China Coal Daily Track (Oct 14) 2019-10-14

Thermal coal Production area Coal prices kept largely stable late last week in Ordos, Inner Mongolia, with purchases not bad from surrounding power plants. With inventories slightly decreasing

10 China Sep steel products exports rebound on price edge 2019-10-14

China's steel products exports in September bounced back 6.5% from the previous month, reversing a 10.1% slip in August, according to customs data released on October 14, since cheaper prices kept att

Most Read Articles

1 PetroChina unit strikes high oil, gas flows in deep Tarim well 2019-10-08

An exploration and production unit of China's state energy giant PetroChina has drilled into high flows of natural gas and condensate in an exploration well in northwestern region Xinjiang, in what co

2 Indonesian thermal coal prices gain strength from India's supply crunch 2019-10-11

Indonesian thermal coal prices continued moving upward in China's seaborne import market, boosted by fuel hunger in another major destination India, where a large coal mine was flooded and expected to

3 China met coke demand dented by weak steel outlook 2019-10-12

Sentiment started to weaken in China's met coke market, along with a dismal steel outlook stemming from overloading ban in eastern China and lower-than-expected buying appetite from mills nationwide.

4 China Coal Daily Track (Oct 12) 2019-10-12

Thermal coal Production area Some miners in Ordos of Inner Mongolia lowered coal prices amid increasing supply and slack demand from portside traders, yet price cuts failed to improve sales. L

5 Indonesia sets coal reference price at 3-yr low of $64.8/t in Oct 2019-10-08

Indonesia's Ministry of Energy and Mineral Resources has set its October thermal coal reference price, also known as Harga Batubara Acuan or HBA, at $64.8/t, notching the lowest level since October 20

6 Chile largest coal mine closure may spur imports from Indonesia 2019-10-10

Chile is likely to resume imports of sub-bituminous coal from Indonesia, as its largest domestic coal mine is facing risk of closure in the near term, sources reported. Mina Inviern

7 China's 5,500 Kcal coal declines on weak buy, yet hopes remain 2019-10-10

Chinese domestic 5,500 Kcal/kg NAR thermal coal, a major coal grade traded at Bohai Rim ports, lost ground on second trading day after golden week holiday due to lack of buying demand. On

8 China thermal coal market regaining momentum after holiday 2019-10-08

China's thermal coal market seems on track to recover from weeklong National Day holidays ending October 7, fueling hopes that prices of the fossil fuel may embrace a pickup soon. D

9 Indonesian coal miners anxious about law enactment impasse 2019-10-10

Seven Indonesian coal mining companies are facing legal uncertainty as deliberations on the amendment of the 2009 Mining Law were postponed, deterring them from adding investment on their assets.

10 China spot thermal coal market flat after holiday 2019-10-09

Participants in Chinese spot thermal coal market were largely sidelined shortly after the National Day holiday ended on October 7, with offers and bids slow to emerge on the first day back to the mark

Scan to download sxcoal.com mobile APP

X