Coking Coal Prices Drop as Negotiations on the Australia-China Trade Dispute Approach

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Chinese coking coal futures had a more than 3% decrease on Tuesday, December 20, widening losses as the supply of the steelmaking component may increase if and when Beijing lifts trade sanctions on Australia.

The world’s largest manufacturer of steel is China. It has since taken steps to limit shipments of several Australian goods, most notably coal.

During her visit to Beijing this week to try to heal frayed diplomatic ties, Australian Foreign Minister Penny Wong was planning to press China to relax trade penalties.

Beijing and Canberra’s relations deteriorated after Australia passed measures to address what it claimed was Chinese meddling in Australian politics and demanded an impartial inquiry into COVID-19’s genesis.

Australia China Coal

“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,” mentioned Zhongzhou Futures analysts in a note.

The most commonly traded May coking coal on China’s Dalian Commodity Exchange DJMcv1 finished daytime trading 3.5% down at 1,841.50 yuan ($263.79) a tonne. It fell to 1,822 yuan, its lowest level since December 8.

After dropping to its lowest level since November 24 at 2,636 yuan, coke DCJcv1, a refined form of coking or metallurgical coal, slumped 4.1% to 2,652 yuan a tonne.

“Concerns over surging COVID-19 infections in China added pressure on prices of the raw materials and steel benchmarks,” said the Hellenic Shipping News Worldwide.

On the Shanghai Futures Exchange, prices fell for stainless steel SHSScv1, rebar SRBcv1, hot-rolled coil SHHCcv1, wire rod SWRcv1, and coil.

Iron ore recovered from Monday’s sell-offs because it is not subject to Beijing’s restrictions on Australian commodities.

The benchmark January iron ore contract on the Singapore Exchange, SZZFF3, climbed 1.3% to $109 per tonne as of 0700 GMT, while the most active May iron ore contract on the Dalian Stock Exchange, DCIOcv1, increased 0.2% to 804.50 yuan per tonne.

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