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The Chinese government has imposed output restrictions on steel mills and coke producers in the capital and its surrounding areas ahead of the talks scheduled for November 5-11 in a bid to cut air pollution.
While some expect the restrictions to have some impact on demand for seaborne met coal, others are not anticipating any change.
“The impact will just be for the short term. Also, Chinese domestic met coal production in the north could see some decline as well so I don’t expect to see much differences in prices,” a trading source told Steel First on Tuesday October 28.
A mill source said that the government has issued instructions to steelmakers to slow down the rate of their coke production. The mill has yet to comply, he said.
State-owned mill will have no choice but to adhere to these instructions however, the source said, and this could have some effect on demand for seaborne coking coal.
Pricing remains the dominant factor that affects his purchasing plans. “I have enough stock now so I’m not in a rush to make any purchases, but if prices are okay, I will still buy,” he said.
Steel First's cfr Jingtang premium hard coking coal index was calcuated at $121.12 per tonne on Tuesday, down $0.06 from Monday. The cfr Jingtang hard coking coal index also fell $0.87 to $110.19 per tonne.
The fob Australia indices were unchanged at $111.86 per tonne for premium hard coking coal and $100.28 per tonne for hard coking coal.
Separately, data released by China Iron & Steel Assn (Cisa) on Tuesday showed that its member mills produced an average of 1.7629 million tpd of crude steel during the second ten days of October, down 2.25% from the preceding period.
Cisa members are mainly medium-sized and large steelmakers and account for around 80% of the country’s total steel output.
On the Dalian Commodity Exchange, the most-traded January coking coal contract closed at 774 yuan ($126) per tonne on Tuesday, up slightly from Monday’s close of 773 yuan ($126) per tonne. The most-traded January coke contract closed lower at 1,087 yuan ($177) per tonne, compared with the previous day’s close of 1,096 yuan ($179) per tonne.
The yuan prices are the equivalent of cfr prices plus 17% VAT and port charges of about 35 yuan ($6) per tonne.
The upcoming Asia-Pacific Economic Cooperation (Apec) summit in Beijing has led to a divergence in the demand outlook for seaborne metallurgical coal.