Domestic Coking Coal Market Swung On A Strong Note In First Half Of October, But May Face Growing Downward Pressure In November

Boosted by sustained demand and expected supply limits triggered by coal mine security inspections, domestic coking coal market still swung on a strong note in mid-to-early October, while Australia-origin coking coal prices kept hiking amid rising demand. During this period, the price gap between domestic and imported coking coal continued to expand. With limited improvement in terminal demand, market expectations for raw material demand weakened starting mid-to-late October. In addition, more losses of steel mills were reported. Therefore, domestic coking coal prices dipped, and imported Australian coking coal prices, at the same time, fell from highs, but were still at premiums of 600-700 yuan/mt over domestic ones. Despite this, coking coal imported from Australia still lacked a cost-effective advantage.

In November, restart of some coal mines and rising volume of imported coal will keep domestic coking coal supply ample. On the demand side, steel mills sustain more losses, and they may confront with production cuts and restrictions during the heating season. Under such circumstance, domestic and imported coking coal prices are expected to come under growing downward pressure.