China coal short-term outlook February 2023

Thermal coal prices slumped by RMB200/t in the first half of February and then regained RMB200/t in the second half. Large coal inventories, resumption of Chinese new year holiday, the return of Australian coal and mine collapses all twisted together to drive significant market fluctuations. The uptick in steel transactions after mid-February offered confidence to the steel mills, encouraging them to maintain high operation rates and rapidly consuming the coking coal inventories they had built up before the Lunar New Year holiday. Improved margins also helped to initiate their appetite for coking coal and eventually pushed up the price, again, after a sluggish early February. We expect the trend will continue and the coking coal price will gain more in March.