The price of metallurgical coal in China fell to a seven-month low on Wednesday, pressured by prospects of higher supply and sustained weakness in demand for the steelmaking raw material, while fresh hopes of economic stimulus supported coal prices. iron ore.
The most-traded September metallurgical coal contract on the Dalian Commodity Exchange ended trading down 6.7% at 1,922.50 yuan ($284.78) a tonne, after hitting 1,885.50 yuan earlier, the weakest level since December 13.
Coke lost 3.6% to 2,590.50 yuan per tonne.
“Demand for raw materials has slowed due to reduced production from steel mills,” analysts at Sinosteel Futures said in a note.
China, the world's largest producer of steel, intends to reduce production of the material for the second year in a row, in line with its decarbonization targets. Steelmakers also cut output more decisively due to weak demand as Covid-19 restrictions constrained economic activity and bad weather hampered construction projects.
A backlog of coking coal supplies at ports following recent Covid-19 restrictions in Inner Mongolia, a major source of the material, is also putting pressure on prices, along with talks over China ending its unofficial ban on Australian coal imports. .
The benchmark Dalian iron ore contract for September was down 0.4%, while the August steel ingredient contract on the Singapore Stock Exchange rose 2.6% to $99.70 a tonne.
The behavior of iron ore was also supported by the cut in the production forecast of Brazilian mining company Vale for 2022.
Sources: investing.com
