China Coke, Coking Coal Futures Hit Record Highs On Supply Concerns

Chinese coke and coking coal futures on Monday surged by their 8% upper limit to record highs, as market rumours about a suspension of Mongolian coal imports over COVID-19 concerns fuelled fears of tighter supply of the steelmaking ingredients.
The most-traded January 2022 contracts for coking coal DJMcv1 and coke DCJcv1 on China’s Dalian Commodity Exchange DJMcv1 scaled peaks of 2,421 yuan ($373.01) a tonne and 3,053.50 yuan a tonne, respectively.
As the market was abuzz with the supposed two-week suspension of coal importation from Mongolia, a customs official at China’s Inner Mongolia autonomous region told Reuters that all import activities were normal and they did not receive any official notice to halt Mongolian coal imports.
“The current tight coking coal supply trend … (is) still giving strong cost support to coke,” Sinosteel Futures analysts said in a note.
Coke, the processed form of coking coal, is a reducing agent in melting iron ore, the key steelmaking ingredient.
The most-traded January 2022 Dalian iron ore DCIOcv1 ended daytime trading 1.1% lower at 757 yuan a tonne, hovering around a 7-1/2-month low as China’s steel output controls and COVID-19 curbs weighed on sentiment.
Iron ore’s most-active September contract on the Singapore Exchange SZZFU1 was down 1.5% at $136.60 a tonne, as of 0716 GMT.
“The prospect of lower blast furnace iron output in H2 vs H1 2021 is now a reality though Australian iron ore shipments continue to disappoint,” Navigate Commodities Managing Director Atilla Widnell said, maintaining a medium-term target of $140-$170 a tonne CFR China.
Spot iron ore for delivery to top steel producer China SH-CCN-IRNOR62, which hit a record-high $232.50 a tonne in May, traded at $140.50 on Friday, the lowest since December, SteelHome consultancy data showed.
Construction steel rebar on the Shanghai Futures Exchange SRBcv1 rose 1.6%, while hot-rolled coil SHHCcv1 climbed 1.4%. Stainless steel SHSScv1 advanced 0.7%.