Chinese coking coal futures drop to daily limit on quiet trading

The Asian seaborne hard coking coal spot market was quiet on Friday March 7, but sentiment worsened after Chinese coking coal futures dropped by their maximum permitted daily limits.

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Steel First’s premium hard coking coal index for material sold on a cfr Jingtang basis was calculated at $133.78 per tonne on Friday, unchanged from levels seen on Thursday.

The premium hard coking coal index fob Australia’s DBCT port was $121.34, down by $1.90 from Thursday.

The cfr hard coking coal index stood at $122.00 per tonne, unchanged from the previous day. The fob value was $110.52 per tonne, down by $1.92 from Thursday.

“It only took several months for coking coal prices to drop from $150 per tonne to the current $130 per tonne level. Losses are increasing as we book more cargoes,” a trader in Shandong said.

“We are very cautious about new bookings now, because prices could fall by $5-10 per tonne during the time you wait for your cargo to arrive,” she added.

There were few offers or bids heard in the extremely slack market, as a result of thin buying interest, several market participants said.

“Bids must have dropped further in the past few days, because there were few enquiries,” a trader in Hebei province said.

“Steel mills are operating at curbed utility rates due to stricter environmental controls and poor downstream demand, and this could continue for a while,” a trader in Dalian city said. He did not expect coking coal prices to experience a rebound in the near term.

The plummeting coking coal futures added to the bearish sentiment.

The most-traded May coking coal futures contract on the Dalian Commodity Exchange dropped by a daily limit of 4% to close at 840 yuan ($137) per tonne on Friday, compared with 874 yuan ($143) per tonne on the previous trading day.

The most-traded May coke contract on the same exchange closed at 1,182 yuan ($193) per tonne, compared with 1,224 yuan ($200) per tonne on Thursday. It also dropped by a daily limit of 4%.

The daily price limit determines the maximum permitted price fluctuation for each contract traded on the exchange. It is set at 4% for metallurgical coal.

The yuan prices are the equivalent of cfr prices plus 17% VAT and port charges of about 35 yuan ($6).

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