This is partly because the entire country is focused on little else other than the week long National Holiday which starts on Sunday.
It’s likely once the holiday is over inquiries will pick up but no-one is yet expecting interest to be as strong as it was last year.
China Daily, quoting the Bank of China Ltd, said the Chinese economy appeared to have hit bottom in 2Q 2012 and is still cooling.
“We see signs that indicate the ongoing destocking among manufacturers is coming to an end. Destocking in China usually lasts six to nine months, but this time around it has already lasted for 10 months,” Cao Yuanzheng, BOC’s chief economist was quoted as saying.
Commenting on the state of the Chinese steel sector, the Beijing analyst echoed BOC’s view, telling China Coal Report while the worst is over, excess steel stock has yet to be worked off. But he warns there is little incentive for the majority of mills to do so.
“The Chinese steel market is over-supplied and we’re not expecting cutbacks in steel production. State-owned steel companies know they will be supported by the government and they don’t want to lose market share so they won’t cut back,” he said.
Meanwhile, Chinese coking imports in August fell to their lowest level since May 2011, dropping to 2.569Mt last month as Chinese buyers stayed away from the spot market and took only contract tonnes.
June 2012 marked the highest month on record for Chinese coking coal imports, when 6.5Mt of coking coal was imported to take total coal imports for the month to 22.5Mt, the highest import month this year.
Market conditions saw coking coal volumes drop off in July by 40% to 3.9Mt as the Chinese government reined in the economy with that downward trend continuing in August as Chinese buyers remained largely absent from the market.
With the quarterly prices for Oct-Dec now established at $170/t FOB, hopeful producer sources told China Coal Report there has been a slight improvement in Chinese interest for spot cargoes. However, given the fact Chinese mills have ample domestic supply, bids are well below the current quarterly benchmark.
As mentioned sources are quoting Chinese bids around $155/t CFR for premium hard coking coal, equating to around $140/t FOB. But few producers are willing to consider placing tonnes at these prices, unless they are desperate to move coal.
Much has been made of the recently announced government stimulus package and the suction-like effect some expect it to have on commodities such as coal. Views range widely but most observers are of the opinion that improvement in demand will start to be felt in Q4.
China Daily quotes the BOC report as predicting a rise in GDP growth to 8.2% in Q4, from 7.7% in the quarter just ending but most analysts seem to have written off any major recovery taking shape before the end of the year.
Total coal imports for August, according to data from The Tex Report, were 17.2Mt, including 12.7Mt of thermal coal and 1.9Mt of anthracite.
In a briefing note Commonwealth Bank Australia said while thermal coal imports remained high in August, China’s thermal power output fell by 7.2% y-o-y in August, while hydropower lifted 43.9%, reflecting a substitution towards hydropower.
More information can be found in the China Coal Report which presents weekly updates on both the producer and consumer sides of the Chinese coal market. With information on trade, transport and policy updates, the China Coal Report provides comprehensive coverage for anyone dealing with the Chinese coal market.
For more information on this or other publications produced by Energy Publishing Asia Pacific, please contact firstname.lastname@example.org, call +61 7 3020 4000 or visit http://www.coalportal.com/