China's coking coal price downturn is expected to slow down on expectation of lower supply availability amid the potential disruption of imports from Mongolia following two positive cases were found, partly countering the downward pressure induced by the implementation of the second round of coke price cut.
The border crossing has suspended southward coal dispatches after two COVID-19 cases were detected on the morning of July 6. Customs clearance for trucks hauling coal from Mongolia remained normal at the border port, but could be curbed if more cases are found in the mass resting today.
On July 5, a total of 518 trucks loaded with Mongolian coal passed through Ganqimaodu, up from 484 trucks on the preceding day, Sxcoal data showed.
Mongolia ranked first in coking coal supply to China, with the shipment at 1.80 million tonnes in May, accounting for 39% of China's total coking coal imports, according to the General Administration of Customs.
A disruption of Mongolian coking coal imports would directly lead to lower availability of coking coal supply in China, and the gap is hard to be filled immediately by its second-largest supplier Russia due to longer transportation time.
Some coking plants in Shanxi started to keep their feed coal inventory levels from further falling after reaching around 5-6 days' worth of usage, for fear of the potential impact on supply due to the epidemic, Sxcoal learned.
Coking plants' restocking appetite for coking coal may be slightly shored up by the concern, helping cushion the decline of coking coal prices, which have just restarted downward moves after coke prices fell by 200 yuan/t early this week.
On July 6, one auction of low-sulfur primary coking coal (S 0.7%, A 8.5%, G 90) in Luliang of Shanxi was started at 2,400 yuan/t, down 50 yuan/t from June 29 and concluded at 2,810-2,820 yuan/t, down 45-60 yuan/t from the previous levels. The miner's auction for 2%-sulfur primary coking coal was concluded at 1,975 yuan/t, down 215-220 yuan/t.
"The import policy at the border crossing on July 7 would to some extent affect the projection on the near-term price trend," said one local trader source.
If the virus is under control very quickly, coking coal prices would still be under downward pressure, considering coking plants are inclined to cut feed coal costs to alleviate losses, he noted.
On July 6, Fenwei CCI index for Shanxi low-sulfur primary coking coal stood at 2,750 yuan/t, ex-washplant with VAT, steady compared with the preceding day; and the index for Shanxi high-sulfur primary coking coal was at 2,600 yuan/t, also unchanged.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.