China’s Shanxi Coking Coal leaves low sulfur premium HCC prices unchanged for Q1

December 31, 2019, 12:10 pm | Admin

China’s Shanxi Coking Coal Group Monday set its low sulfur premium hard coking coal prices for the first quarter of 2020 unchanged Monday from Q4.

“No price change will be made to premium hard coking coal with a sulfur content below 1.3%, while a variety of price cuts between Yuan 20/mt and Yuan 50/mt will be made to high sulfur [above 1.3%] hard coking coal, fat coal, 1/3 coking and lean coal,” a company source said. China’s quarterly contract prices have been mostly steady in 2019, domestic market sources said.

The company also says it plans to cut the night shift at its mine from January 1, potentially reducing output by 20%, market sources said. “If this is true it may have a bullish implication similar to China’s 276-day policy that was applied back in 2017, a domestic trader said.

Benchmark seaborne premium low vol hard coking coal prices jumped to over $300/mt CFR China in 2017 when China capped production at 276 days/year to remove overcapacity and combat oversupply.

Shanxi Coking Coal Group is China’s largest coking coal producer, and its quarterly price announcement is regarded as the domestic benchmark price.

“A steady Q1 market for low sulfur and low ash premium coals had been widely expected by the market, which makes sense when you consider the ongoing environmental campaigns as well as the number of mine accidents over the course of 2019,” a domestic trader said.

China is the world’s largest consumer of coking coal, with an estimated 90% of consumption met by domestic supply. Market participants closely monitor the differential between domestic and seaborne coking coal prices for import arbitrage opportunities.

“I think this announcement is good news for the seaborne market as the function of market will be for the seaborne prices to strengthen to narrow down the gap,” an international trader said.

S&P Global Platts last assessed the CFR China equivalent of Shanxi PLV at $182.55/mt on December 24, down 39 cents from the week before. The domestic-seaborne price spread stood at $33.05/mt, with seaborne material cheaper.

Last modified on December 31, 2019, 12:11 pm | 952