BEIJING (Reuters) - Chinese coking coal prices were higher on Friday, notching up their first weekly rise in more than a month, amid renewed concerns about lower supplies even as physical buying remains lacklustre, and boosted by renewed gains in thermal coal.
The most-active coking coal futures on the Dalian Commodity Exchange settled up 0.7 percent at 1,156.5 yuan ($167.02) per tonne. They gained 1.3 percent this week, their first rise since early December.
Prices have been under pressure since November when they hit record highs after the government ordered mines to ramp up output to replenish inventories following closures and cutbacks earlier in the year that caused shortages.
Fresh supplies have not hit the market as quickly as many experts had expected.
“Coking coal is still in short supply,” even as steel mills have been operating at lower rates, said Helen Lau, an analyst with Argonaut Securities in Hong Kong.
Mills typically cut output during the quieter winter months when construction demand ebbs, while many have curbed output due to the weeks-long smog alert across northern China.
Steel and iron ore prices remained under pressure on Friday, as demand remained weak and supplies ample. Steel rebar was on track to eke out a small gain this week.
The most-active rebar contract for May delivery on the Shanghai Futures Exchange settled down 0.33 percent at 2,943 yuan per tonne.
Iron ore on the Dalian Commodity Exchange resumed its downward trend, falling 0.3 percent to settle at 547.0 yuan per tonne on plentiful supplies and lacklustre seasonal demand. In mid-December, it touched multi-year highs above 655 yuan per tonne.
“Although we expect coal and iron ore prices to fall back from their recent very high levels, we still expect them to settle well above the early-2016 lows,” HSBC analysts said in a research note.
“That is, we expect that they are past the trough.”
Domestic stocks remain at 2-1/2-year highs, rising by 90,000 tonnes last week to almost 111 million tonnes.
Overall optimism about demand in China, the world’s top steelmaker, remains firm after the government confirmed plans to spend another 800 billion yuan on its metal and steel-intensive rail network this year.
($1 = 6.9244 Chinese yuan renminbi)
Reporting by Josephine Mason; Editing by Subhranshu Sahu and Mark Potter