Chinese credit-tightening weighs on seaborne coking coal market

The Asian seaborne hard coking coal spot market continued to be plagued by weak sentiment on Monday February 24 as several major Chinese banks were reported to be trying to tighten up on mortgage lending.

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The derivatives market was the most affected, with the May coking coal futures contract on the Dalian Commodity Exchange closing 2.8% lower at 906 yuan ($148) per tonne on Monday. Friday’s close price was 932 yuan ($152) per tonne.

The most-traded May coke contract on the exchange also closed lower at 1,277 yuan ($208) per tonne, compared with the previous close of 1,328 yuan ($217) per tonne.

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

On the physical market, downstream buyers were more inclined to keep their stock levels low as they continued to hold a bearish outlook for the short term. Interest for taking cargoes remained low, sources told Steel First.

Steel First’s premium hard coking coal index for material sold on a cfr Jingtang basis was calculated on February 24 at $135.83 per tonne, down by $0.04 from levels seen on Friday.

The premium hard coking coal index fob Australia’s DBCT port edged higher, pushing up by $0.12 to $126.34 per tonne.

The cfr hard coking coal index stood at $124.34 per tonne, up by $0.12 from the previous day. The fob value also climbed, increasing by $0.12, to $114.51per tonne

“Prices are not really the issue here. You have to find someone willing to buy first,” a trading source said.

Market participants speaking to Steel First considered top Australian brands tradable at $135-138 per tonne cfr China and second-tier hard coking coals at $122-126 per tonne cfr China.

A total of 5.23 million tonnes of coking coal was reportedly sitting at the Jingtang port on Monday, up from 5.15 million tonnes seen a week ago.

Rizhao port has 2.09 million tonnes of stockpiles, down from the 2.15 million tonnes recorded last Monday.