中文
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.
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(Writing by Alex Guo Editing by Harry Huo)
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