July 25, 2019 / 2:58 AM / a month ago

China coking coal futures edge higher on upbeat demand outlook

* Coking coal rises for 2nd day, up 11% this year

* Dalian iron ore extends losses in wobbly trade

* Fortescue flags stronger iron ore shipments in 2020

By Enrico Dela Cruz

MANILA, July 25 (Reuters) - Coking coal futures in China edged higher in early trade on Thursday on expectations that spot prices of the steelmaking raw material will remain strong, supported by brisk demand as the world’s largest steel producer ramps up output.

The most-active September coking coal contract on the Dalian Commodity Exchange rose as much as 0.6% to 1,410 yuan($205.23) a tonne. The index has gained 11% this year.

Coke, the processed form of coking coal, climbed as much as 0.9% to 2,144 yuan a tonne.

Prices of spot and imported coking coal in China have weakened over the past month by around 6%-7% due to rising inventory and robust imports of the material, said Helen Lau, metals and mining analyst at Argonaut Securities in Hong Kong.

Coking coal inventory across ports in China stood at 5.73 million tonnes, as of July 19, up 36% from a year ago and 107% this year, she said, while news of renewed audits on anti-pollution measures by mills also weighed on coking coal.

However, prices had stabilised, helped by a switch to lower-priced coking coal to improve steel margins, said Lau.

“Overall, we expect ... prices to stay high after September on increased steel production,” she said.


* The most-traded Dalian iron ore, for September delivery, was down 0.4% at 858.5 yuan a tonne as of 0221 GMT.

* Benchmark spot 62% iron ore SH-CCN-IRNOR62 for delivery to China, fell 2.9% to $116 a tonne on Wednesday, data from SteelHome consultancy showed.

* “Iron ore has seen a steep selloff this week as market sentiment shifts following a run of bearish indicators, with port holdings in China building up, mills’ profitability slipping, steel inventories rising, and predictions for lower iron prices stacking up,” SP Angel analysts said in a note.

* Australia’s Fortescue Metals Group on Thursday forecast stronger iron ore shipments in 2020, but also flagged higher costs as it ramps up production to meet demand from China, its largest market.

* The most-active steel rebar contract on the Shanghai Futures Exchange was 0.3% higher at 3,911 yuan a tonne. Hot-rolled steel used in cars and home appliances edged up 0.2% to 3,836 yuan.

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($1 = 6.8705 yuan)

Reporting by Enrico dela Cruz; editing by Richard Pullin

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