China coal short-term outlook June 2022 Report

Commodity Market Report 01 July 2022

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Report summary

The QHD price dropped to RMB1,200/t at the end of the month from over RMB1,300/t one month earlier. However, the market direction remains unclear in the near term. While summer demand and curtailed imports have supported the coal price, lower-than-expected economic activity is preventing the price from increasing. We expect the market to fluctuate in July, if summer weather starts off mild. Coking coal prices experienced an increase in the first half of the month due to high demand from steel mills. Prices declined in the second half as steel mills forced the coke price to fall. We don’t expect the BF slowdown to continue, it is not sufficient to support higher steel prices and a drastic decrease of coking coal consumption. As such, the domestic coking coal price will remain high.

Thermal: stimulus insufficient to quickly boost the economy
Steel mills: maintain high operation rates despite terrible margin conditions
Outlook: steel demand to marginally improve and support coal demand
Domestic: output slid but will remain high and stable
Thermal imports: sluggish economy pushing imports down
Met imports: seaborne deals weak while Mongolia enhanced its export
Thermal: weak demand caused the coal price to slide
Outlook: is the weather going to be hot or not?
Met: price fluctuated with fragile sentiment in the downstream industries
Outlook: price volatility to continue