The price of FOB QHD 5500 was down to RMB557/t at the end of May – placing it within the range that doesn't require government intervention. Gencos are fulfilling their long-term contracts, and with strong seaborne imports, buying spot coal is a last resort. It's this weak demand that has pushed prices down and we expect they could fall further in June. Weakening demand and improving supply are behind the decline in metallurgical coal prices – FOR Liulin #4 HCC fell slightly to RMB1,340/t in May. Decent profit margins are spurring coal producers to operate at full tilt, but another round of strict environmental inspections at coke and steel producers across the north of China is suppressing output and the subsequent demand for coking coal.