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China’s coking coal prices rebounded on Thursday, aided by resurfacing concerns about contracted supply after several mines halted production amid stringent safety inspections following a deadly mine accident in coal-rich Shanxi province.
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China’s State Council has established an investigation team for the Liushenyu coal mine accident in northern Shanxi that killed 82 people, state media said late on Wednesday. This has reignited fears of wider safety inspections and greater impact on coal supply.
A total of 113 coal mines in Shanxi, with a combined production capacity of 125 million metric tons, remain suspended, according to a survey by consultancy Mysteel released on Wednesday.
Around 452,000 tons of raw coal have been reduced each day after the accident, a survey by consultancy Steelhome showed.
The most-traded coking coal contract on the Dalian Commodity Exchange (DCE) advanced 1.3 percent to 1,284 yuan (US$189.32) per ton as of 0309 GMT, after falling 1.2 percent the previous day.
The most active DCE coke contract rose 1.66 percent to 1,893 yuan per ton.
The real impact on supply was underestimated, some analysts cautioned when coal prices softened on Wednesday.
“Coking coal supply has contracted prominently, supporting prices,” analysts at broker Maike Futures said in a note.
Iron ore lost ground, with the most active DCE contract dipping 0.13 percent to 780 yuan per ton, while the benchmark June iron ore on the Singapore Exchange fell 0.71 percent to US$104.45 per ton as of 0302 GMT.
Analysts at JP Morgan raised their long-term iron ore price forecast to US$90 per ton from US$80 previously.
Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar added 0.38 percent, hot-rolled coil gained 0.39 percent, wire rod was flat, while stainless steel shed 0.54 percent.
Reuters
