Dalian coking coal and coke retreat after record rally
Coking coal and Chinese coke futures fell on Friday, retreating from records reached a session earlier, although steelmaking ingredients were set for weekly gains of more than 10% .
DJMcv1 coking coal on China’s Dalian Commodity Exchange ended the day down 1.8% to 2,523 yuan ($ 389.25) per tonne after a seven-session rally. DCJcv1 coke lost 2.8% to 3,164.50 yuan per ton after a four-day advance.
Their most active January contracts, however, were up 11.2% for coking coal and 10.5% for coke this week.
Friday’s pullback comes after Chinese authorities are reportedly monitoring market activity and punishing speculators.
“The supply problems (of coking coal) in China and Mongolia as well as an import ban on Australian coal are factors that push prices up to ridiculous levels,” said Erik Hedborg, ore analyst. iron to the raw materials consulting firm CRU.
Coke, the transformed form of coking coal, is a reducing agent in the smelting of iron ore, the key ingredient in steelmaking. Among iron ore products, lumps are more coke intensive than pellets and fines.
China’s demand for lumpy iron ore, in particular, has plummeted due to rising coal and coke prices, Hedborg said.
Analysts said concerns over China’s coking coal supply increased this week with the border closure with Mongolia, amid low production at local mines due to environmental campaigns and security checks. .
“Chinese steelmakers have no choice but to look to Russia, Canada and the United States as the second best option for sourcing coking coal,” said Julien Hall, regional director of the metal pricing at S&P Global Platts.
Dalian iron ore for January delivery DCIOcv1 fell 1.4% to 840 yuan per ton, but rose 9.3% for the week after five consecutive weekly losses. The September iron ore contract on Singapore’s SZZFN1 was up 2.1% to $ 156.45 per tonne at 0742 GMT.
Rebar on Shanghai Futures Exchange SRBcv1 gained 0.1%, while hot-rolled SHHCcv1 coil slipped 0.6%. SHSScv1 stainless steel fell 0.9%.
Source: Reuters (Reporting by Enrico Dela Cruz in Manila; Additional reporting by Muyu Xu in Beijing; Editing by Subhranshu Sahu and Uttaresh.V)