China's thermal coal prices have bottomed out but domestic coking coal, used by steelmakers, is likely to remain weak during the first half of the year, Yang Deyu, general manager of China's Yanzhou Coal said on Tuesday. Yang told reporters on the sidelines of a Coaltrans conference in Beijing that a recovery in coking coal prices hinged on government policies and demand from steelmakers.
He also said the company was looking into investing in coking coal resources overseas, but gave no details.
Although China's economic growth was supporting demand for coking coal, closures of small mines had caused a slump in domestic supply, prompting a surge in imports, Yang said.
China's coking coal imports surged to 1.33 million tonnes in March, as lower international prices drew Chinese buyers. Major exporters to China include Mongolia, Australia, Canada and Indonesia.
"Coking coal prices are likely to fluctuate within a low range," Li Yuanzhong, general manager of Sinosteel Raw Materials Co, told the conference.
"China is likely to become a large market that can absorb the world's excess coking coal production," Li said.
China's steel sector, the world's biggest, has weakened again after showing signs of recovery earlier this year. The current limp demand from the sector has led some to believe that China's coking coal prices are likely to fall further.
"Coking coal prices probably are going to fall again next month. The current prices can't be held on to for too long," said an official with a coking coal producer in Shanxi Province.
Source: Reuters
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