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Physical iron ore prices were expected to drop to new lows of less than $80 per tonne on Tuesday, driven down by oversupply and a slowdown in Chinese demand growth.
Traders speaking to Steel First said that although the outlook for coking coals, especially pulverized coal injection (PCI), was more positive than it had been for several weeks, the fundamental weakness across the raw materials complex was weighing on any price upside.
“It’s a really mixed bag,” an Australian trader commented. “Although there is a bit more demand from the traditional markets such as Japan and India, China is still a mess, and that means that any possible gains we might make could easily be cancelled out.”
Recent gains in Chinese coking coal port stock prices, reported to have increased by 20 yuan ($3.25) per tonne in the past week, could be due to restocking ahead of China’s week-long National Day festival at the beginning of October, a producer said.
Some supply tightness was reported in the second-tier hard coking coal market, as a number of Australian producers on the North Coast railway line linking mines in the region to Gladstone port were affected by a derailment at the end of last week, sources said.
Mines on the line include Kestrel, Gregory, Lake Vermont, Curragh and Blackwater.
Steel First’s cfr Jingtang premium hard coking coal index was calculated at $122.96 per tonne on Tuesday, down by $0.20 from Monday’s level.
The cfr Jingtang hard coking coal index was up by $0.79 at $108.83 per tonne.
The fob Australia premium hard coking coal index rose by $1.56 to $113.54 per tonne, while the fob Australia hard coking coal index was up by $0.21 at $98.02 per tonne.
On the Dalian Commodity Exchange, the most-traded January coking coal futures contract closed at 784 yuan ($127) per tonne on Tuesday, up from Monday’s close of 771 yuan ($125) per tonne.
The most-traded January coke contract also closed up at 1,066 yuan ($173) per tonne, compared with the previous trading day’s close of 1,049 yuan ($171) per tonne.
The yuan prices are the equivalent of cfr prices plus 17% VAT and port charges of about 35 yuan ($6) per tonne.
Seaborne Asian coking coal prices held relatively steady on Tuesday September 23, with any buying prompted by low port inventories muted by further falls in the iron ore and steel markets.