– The price of coking coal on the Dalian Commodity Exchange on September 28 increased by 4.4% to 2,972 CNY
– Thermal coal futures on the Zhengzhou Commodity Exchange rose 5.3% to CNY 1,297/ton
– Coke futures in Dalian rose 4.5% to CNY 3,348/ton.
China’s coking coal and coking coal prices rose more than 4%, supported by tight supply amid increasingly stringent emissions standards in Beijing, despite demand for the raw materials. steel still fell as mills were forced to cut output.
Australian coal prices on the world market fell while coal prices on the Chinese market skyrocketed, with a difference of $85/ton.
Suppliers from the US and Canada that have traditionally sold coal to Europe have turned to China, which could double their profits, while European mills have turned to Australian coal, where they have quality and cheap supply can be obtained.
Chinese officials believe that the loss from Australia’s coal resources will be adequately compensated by other suppliers and by the country’s own huge reserves. But the reality is that China has been hit by a series of supply shocks.
Mongolia has replaced Australia as China’s largest source of coal, but the COVID-19 pandemic forced the country to close two main coal transport routes in May 2021.
Meanwhile, the amount of coal available from suppliers is limited. China’s total coal imports fell from 46 million tons in the January-July 2020 period to 26 million tons in the January-July 2021 period.
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Mongolia has replaced Australia as China’s largest source of coal.
China’s steel mills consume nearly 700 million tons of coal a year on average, and 88% of coal comes from domestic mines. However, imported coal is still an important factor both in terms of quality and flexibility in meeting demand.
The price of coking coal on the Dalian Commodity Exchange on September 28 increased 4.4% to 2,972 CNY (equivalent to 459.62 USD)/ton. Thermal coal futures on the Zhengzhou Commodity Exchange rose 5.3% to CNY 1,297 a tonne amid declining supply. Coke futures in Dalian rose 4.5% to CNY 3,348 a tonne.
Tight coal supplies, resulting in power cuts from households to industries in China, have driven steel prices higher. Widespread power shortages have brought production to a halt at many factories, including many that supply Apple and Tesla, while some stores in the northeast operate by candlelight and stores. Trade centers have to close early, economic damage in China is increasing.
On the Shanghai trading floor, the price of steel bar increased by 1.4% to 5,579 CNY/ton. The price of hot rolled coil used in the production of automobiles and home appliances increased 1.1% to CNY 5,618/ton. Shanghai stainless steel prices fell 1.7% to 20,375 CNY/ton.
Iron ore futures on the Dalian bourse fell after rising for three consecutive sessions and fell 4.2% to 670 yuan a tonne.
After one more coal mine had to be closed in September 2021, the price of high-quality coking coal from Son Tay rose to $613/ton. Imported coal for steel mills also increased to a record of $412/ton.
Meanwhile, rising coal prices also cause Chinese steel mills to pass costs on to their customers. With China’s steel industry ordered to maintain 2021 output no more than 1.06 billion tons achieved in 2020, customers are forced to compete to ensure supply.
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