Chinese buyers unwilling to commit to seaborne coking coal purchases

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Recent defaults in the Chinese steel and property sectors mean that, even with prices falling rapidly, potential buyers are unwilling to commit to purchases.

“People are just sitting on their hands, too scared to commit,” a trading source told Steel First. Buyers are in no rush to purchase material as they are waiting for clearer market cues, he added.

“It’s pretty risky to take positions these days, with downstream market weakness. We’re not buying unless there is firm demand from customers,” another trading source said.

Premium hard coking coal prices weakened further on Wednesday, while hard coking coal numbers edged higher.

Steel First’s premium hard coking coal index for material sold on a cfr Jingtang basis was calculated at $121.53 per tonne on Wednesday, down by $1.05 from levels seen on Tuesday.

The premium hard coking coal index fob Australia’s DBCT port was $112.79, up by $0.56 from Tuesday.

The cfr hard coking coal index stood at $112.79 per tonne on Wednesday, down by $1.76. The fob value was $103.67 per tonne, up by $0.34 from Tuesday.

Indicative buying interests for top Australian brands were heard about $120 per tonne cfr China and $110 per tonne for second-tier hard coking coal.

Elsewhere in Asia, there was “little opportunity” to sell on the spot market, a third market source said.

The most-traded September coking coal futures contract on the Dalian Commodity Exchange closed at 843 yuan ($137) per tonne on Wednesday, down from Tuesday’s close of 847 yuan ($138) per tonne.

The most-traded September coke contract closed at 1,207 yuan ($196) per tonne, also down from the previous close of 1,214 yuan ($197) per tonne.

The yuan prices are equivalent to cfr prices plus 17% VAT and port charges of around 35 yuan ($6) per tonne.

Separately, benchmark negotiations for second-quarter coking coal contracts were expected to be about $120-125 per tonne fob Australia, several sources said.