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China coal short-term outlook December 2019 : mine accidents nudge prices higher

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08 January 2020

China coal short-term outlook December 2019 : mine accidents nudge prices higher

Report summary

A series of unconnected mine accidents in November and December has stopped the downward trend in coal prices in the short term. Qinhuangdao 5,500 increased to RMB561/t at the end of December from RMB554/t one month earlier. We expect the accidents will have an impact in the first quarter of 2020, as the market is concerned mines will face stricter safety inspections after the Chinese new year holiday at the end of the month. However, we still believe domestic supply will maintain strong growth in 2020. A halt on imports and strong steel production resulted in the coking coal price rising RMB60/t to RMB1,450/t FOR by 31 December, on a premium low-sulphur HCC Liulin #4 basis. We expect the price to increase further to RMB1,480/t although the supply tightness will ease from mid-January when imports recover.

Table of contents

  • Series of mine accidents underpins thermal coal price in short term
  • Why haven’t 2020 long-term contracts been agreed yet?
  • Import halt and strong demand revive domestic coking coal prices
  • Thermal coal demand slumps in January as Chinese new year approaches
  • Strong steel production boosts metallurgical coal demand
  • Domestic output continued to rise, despite accidents and safety checks
  • China approved 206 Mt of coal capacity in 2019

Tables and charts

This report includes 11 images and tables including:

  • Key thermal coal prices: history and forecast, US$/t
  • Hard coking coal price arbitrage at Tangshan steel mill, US$/t nominal
  • Monthly coal-fired power generation, TWh
  • Monthly hydro-power generation, TWh
  • Monthly throughput at Qinhuangdao port, Mt
  • Monthly throughput at Huanghua port, Mt
  • Monthly hot metal production, Mt
  • Monthly metallurgical coke production, Mt
  • Thermal coal supply, Mt
  • Metallurgical coal supply, Mt

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