Coking Coal Prices under Long-Term Contracts Will Hardly Fall in the Fourth Quarter, But the Struggles of Coking and Steel Plants May Begin to Ripple across Coal Mines Next Year

SHANGHAI, Sep 29 (SMM) - As September is about to end, coking coal mines are now negotiating long-term supply agreement for shipment in the fourth quarter. According to industry insiders interviewed by CLS, coking coal prices under long-term contracts will hardly fall in the fourth quarter amid the current supply-demand picture. Coking coal mines are holding their offers firm. However, due to the lagging effect, the struggles of coking and steel plants in the middle and lower reaches of the industry chain may be gradually transmitted to coking coal enterprises next year.

Coking coal mines still dominate the pricing power in the negotiations of long-term supply contracts in the fourth quarter

Recently, prices of coking coal and coke have gone up. Coke prices gained 100 yuan/mt in many regions, while coking coal prices in Shanxi rebounded to 2,500 yuan/mt.  

Three factors have contributed to the rise of coking coal prices, one business manager told CLS. 

The supply side has contracted slightly, while demand has strengthened. Safety checks on coal mines have been enhanced due to upcoming 20th National Congress and frequent coal mine accidents. Some coking coal has flowed into the thermal coal market amid rising prices of the latter, further tightening the supply of the former.  

Buyers will begin to stock up coking coal in December for the Chinese New Year, which will also support coking coal prices.