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China coking coal, coke futures plunge on fears of regulatory controls

Chinese coking coal and coke futures closed more than 5% lower on Tuesday, falling for a third straight session on concerns over more government controls to stabilise prices and ensure supplies.

In the first ten days of September, coking coal and coke prices surged 19% and 11.6%, respectively, compared with the last ten days in August, data from the National Bureau of Statistics showed.

“(Investors) should be cautiously trading given uncertainty of policy in the future,” analysts with SinoSteel Futures wrote in a note.

“Recently affected by environmental inspections, energy consumption controls and crude steel production cuts, both supply and demand of coke fell.”

China’s President Xi Jinping visited Yulin city, a major coal mining region in Shaanxi province, on Monday to learn about local situations including coal utilisation, state media reported on Tuesday.

The most-active coking coal futures on the Dalian Commodity Exchange DJMcv1, for January delivery, slumped 5.4% to 2,703 yuan ($419.25) per tonne at close.

Coke futures ended down 5.3% at 3,342 yuan a tonne.

Steel on the Shanghai Futures Exchange was also driven by a drop in raw material prices.

Construction used rebar fell 3.5% to 5,492 yuan a tonne.

Hot rolled coils, used in cars and home appliances, slipped 3.1% to 5,689 yuan per tonne.

Stainless steel futures on the Shanghai bourse ended 2.2% lower at 19,010 yuan a tonne.

FUNDAMENTALS
* Benchmark iron ore futures on the Dalian exchange were down 1.5% to 711 yuan a tonne.

* Spot prices of iron ore with 62% iron content for delivery to China fell $4.5 to $127 a tonne on Monday, according to SteelHome consultancy.

* China’s southwest Yunnan province asked local producers to restrict output on steel, aluminium and other materials. Part of the planned production in September would be postponed to the last two months of the year.
Source: Reuters (Reporting by Min Zhang and Shivani Singh; Editing by Devika Syamnath)

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