China coking coal extends rally into fourth day
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The most-active coking coal futures on the Dalian Commodity Exchange ended the session up 3.7 per cent at 1199 yuan ($US172.91) per tonne. Darren Pateman
Chinese coking coal prices rose for a fourth straight session, notching up their best daily gain in a month, as investors bet on tighter supplies amid a crackdown on illegal mining by the world's top coal producer.
As for the price of ore with 62 per cent iron content delivered to China's Qingdao port, it rose 1.9 per cent or $US1.48 to $US77.73 a tonne "after a surge in the futures market led to a pick-up in trading activity during what is typically the restocking period ahead of the Chinese New Year", according to Metal Bulletin.
Recovering from a 2-1/2-month low hit last week, the most-active coking coal futures on the Dalian Commodity Exchange ended the session up 3.7 per cent at 1199 yuan ($US172.91) per tonne.
That's just under a short-term resistance level at its 14-day moving average. Prices settled at 1179 yuan.
Prices are up 8 per cent over the past four sessions after
slipping to 1106.5 yuan last week, weakest since October 17.
The gains have come as the market digests a raft of policy announcements by the government aimed at closing inefficient, outdated coal mines and steel mills.
Shanxi province, the country's top coal producer, said it plans to cap output and consolidate the industry around big producers over the next four years in a bid to boost efficiency.
At the weekend, state media reported that the nation's biggest steelmaking province Hebei expects to slash 31.86 million tonnes of steel and ironmaking capacity in 2017.
Coke futures were also higher, closing up 4 per cent at 1589 yuan per tonne. They settled up 1.3 per cent at 1548 yuan.
While steelmaking raw material costs have been higher in the past few weeks, analysts believe steel mills have maintained their profit margins due to suspensions of operations as toxic smog blanketed the north of the country in recent weeks.
"This disruption to steel supply may be acting to boost margins for China's domestic steel producers," Barclays Capital said in a note, adding that margins have remained high at 69 per cent.
The most-active rebar contract for May delivery on the Shanghai Futures Exchange ended the session up 3.6 per cent at 3048 yuan. It settled at 2960 yuan.
Iron ore prices on the Dalian Commodity Exchange rose 4.5 per cent to close at 571.5 yuan per tonne buoyed by robust demand from China, even as the Australian government warned of a steep decline in prices in 2017. Prices settled at 550 yuan.
Confidence has recently been boosted by strong imports into China - December iron ore shipments from Australia's Port Hedland terminal hit a record 37.4 million tonnes in December.
Domestic stocks dipped 0.4 per cent to 108 million tonnes last week, although they are still at 2-1/1-year highs.
