Chinese producer Shanxi Coking Coal has maintained long-term contract prices for low-sulphur coking coal in 2020 after a spate of mine accidents resulted in production cuts that tightened supplies.
The most recent mine accident occurred yesterday at a coking coal mine in Shuozhou city in Shanxi province, causing five deaths. The operator, Datong Coal Mining Group, has suspended operations at all of its mines in the region.
Spot prices for low-sulphur coking coal have increased by about 20-30 yuan/t to about Yn1,400/t ($200/t) on an ex-mine basis as a result of these accidents and production cuts, although spot prices affect only about 5-10pc of Chinese buyers, mainly smaller privately-owned steel mills.
But long-term contract prices for high-sulphur coking coal grades, along with other coking coal types such as semi-hard and lean coal, have fallen by Yn20-50/t in this round of price revisions.
"It seems like domestic coking coal prices are still overall on a downward trend," a Singapore-based trader said. "But as long as these mining accidents keep occurring, it might just keep low-sulphur coking coal prices stable for the meantime."
With domestic low-sulphur coking coal prices currently about $30-40/t higher than seaborne and no change in sight, seaborne coking coal should continue to be a favoured alternative for Chinese steel producers. The Argus assessment for premium low-volatile hard coking coal delivered on a cfr China basis has fallen by 10pc since mid-October to $149.80/t cfr China today.
By Dylan Wong
