Coking coal slumps as talks on Australia-China trade rift loom
CHINESE coking coal futures dropped more than 3 per cent on Tuesday (Dec 20), extending losses, as supply of the steelmaking input might increase if and when Beijing lifts trade sanctions against Australia.
Australian Foreign Minister Penny Wong was set to push China to lift trade sanctions during this week’s trip to Beijing aimed at mending strained diplomatic ties.
Relations between Beijing and Canberra soured after Australia introduced laws to deal with what it said was Chinese interference in Australian politics, and called for an independent investigation into the origins of Covid-19.
Top steel producer China has taken measures to restrict or ban shipments of several Australian commodities, including coal.
The most-traded May coking coal on China’s Dalian Commodity Exchange ended daytime trade 3.5 per cent lower at 1,841.50 yuan (S$357.4) a tonne. It earlier hit 1,822 yuan, its weakest since Dec 8.
Coke, the processed form of coking or metallurgical coal, shed 4.1 per cent to 2,652 yuan a tonne, after hitting 2,636 yuan, its lowest since Nov 24.
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“There may be signs of recovery in relations between the two countries. If Australian coal is released, domestic coking coal will turn from a shortage to a surplus,” Zhongzhou Futures analysts said in a note.
Concerns over surging Covid-19 infections in China added pressure on prices of the raw materials and steel benchmarks.
Rebar on the Shanghai Futures Exchange slipped 0.7 per cent, hot-rolled coil dipped 0.6 per cent, wire rod shed 0.4 per cent, and stainless steel slumped 3.1 per cent.
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However, iron ore – which has not been covered by Beijing’s restrictions on Australian commodities – rebounded after selloffs on Monday.
Dalian iron ore’s most-active May contract rose 0.2 per cent to 804.50 yuan a tonne, while the steelmaking ingredient’s benchmark January contract on the Singapore Exchange was up 1.3 per cent at US$109 a tonne, as of 0700 GMT. REUTERS
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