September 27, 2019 / 4:04 AM / 2 months ago

China coking coal, coke set for 2nd weekly loss on demand worries

* Coking coal down 1.7%, coke slumps 1.9%

* Dalian iron ore bucks trend, gains 2.2%

* China markets shut from Oct.1 for holidays

By Enrico Dela Cruz

MANILA, Sept 27 (Reuters) - Futures prices of coking coal and coke were lower in morning trade on Friday, headed for their second straight weekly loss, ahead of a long holiday in the world’s top metals consumer.

Many Chinese steel mills have been ordered to shut or limit operations starting this week under a strict anti-pollution campaign as the nation prepares to mark the 70th anniversary of the People’s Republic on Oct. 1, when the week-long holidays will begin.

The most-traded coking coal on the Dalian Commodity Exchange , for delivery in January 2020, fell as much as 1.7% to 1,233.50 yuan a tonne and was down 4.2% for the week as traders worried about demand in the world’s second-largest economy.

Coke, the steelmaking material produced by heating coking coal, dropped 1.9% to 1,856 yuan a tonne and was down 3.3% so far this week.

China’s environment ministry warned earlier this week that “unfavourable” weather conditions would lead to a prolonged and widespread outbreak of smog stretching along the eastern coast for around two weeks.

Beyond the holidays, the demand outlook for steel products and raw materials in China is uncertain as latest economic indicators show deepening slowdown amid its bruising trade war with the United States.

China’s industrial production in August fell to its weakest in 17-1/2 years, while exports tumbled.

China’s factory activity is expected to have contracted for a fifth straight month in September, a Reuters poll showed.

Doubts remain on whether China and the United States would be able to settle their trade conflict soon, despite U.S. President Donald Trump’s remarks on Wednesday saying a deal could happen sooner than people think.

“Understandably, investors are showing little reaction (to Trump’s remarks), as they have learned that things could easily turn and have gotten whip-sawed by getting ahead of their skis in the past,” said Edward Meir, commodity consultant at brokerage INTL FCStone.

FUNDAMENTALS

* Dalian iron ore bucked the trend, extending Thursday’s gains as it rose 2.2% to 646.50 yuan a tonne, despite sluggish trading in the physical market ahead of the holidays.

* Prices for spot cargoes of benchmark iron ore with 62% iron content for delivery to China SH-CCN-IRNOR62 slipped to $92.50 a tonne on Thursday, from $93 the day before, according to data from SteelHome consultancy.

* Brazilian iron ore miner Vale SA on Thursday lowered its 2019 pellet production forecast to 43 million tons from 45 million tons, but said this should not affect sales.

* Top global steelmaker China, despite years of trying to curb overcapacity in its steel sector, is still having trouble containing increasing illegal new capacity, a Ministry of Industry and Information Technology official said on Thursday.

* Stainless steel on the Shanghai Futures Exchange edged down 0.9% to 15,580 yuan a tonne.

* Shanghai construction steel rebar was down 1.7% at 3,415 yuan a tonne, while hot-rolled steel coil, used in cars and home appliances, slipped 1.6% to 3,433 yuan.

Reporting by Enrico dela Cruz; Editing by Aditya Soni

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