September 24, 2019 / 7:54 AM / 20 days ago

UPDATE 1-China coking coal futures hit 5-month low amid steel output curbs

* Dalian coking coal, coke slump nearly 4%

* Dalian, Singapore iron ore benchmarks down

* Hebei province steps up smog controls (Updates with more comments, closing prices, graphics)

By Enrico Dela Cruz

MANILA, Sept 24 (Reuters) - China’s coking coal futures prices fell for a sixth session on Tuesday to their lowest in more than five months due to tepid demand for the steelmaking raw material, amid production curbs on steel and coke ahead of China’s National Day celebrations.

The most-traded coking coal on the Dalian Commodity Exchange , for January 2020 delivery, ended 3.8% down at 1,245.50 yuan ($175.33) a tonne. It slumped to as low as 1,243 yuan during the session, its weakest since April 19 this year.

Cities surrounding Beijing have imposed routine output curbs on steel mills, coking coal producers and other industries to improve air quality as the nation prepares to celebrate the 70th anniversary of the founding of the People’s Republic on Oct. 1.

China’s northern regions are facing a sustained period of pollution for at least the next two weeks, the environment ministry has warned.

Last week the ministry had said that China’s anti-pollution campaign for this year’s autumn-winter heating season will set stricter emission targets for cities that had higher concentrations of damaging particles last time around.

Prices of seaborne thermal and coking coal in China have declined by around 30% year-on-year, mainly driven by reduced demand, said Helen Lau, metals and mining analyst at Argonaut Securities.

China’s coking coal purchases, meanwhile, have been “quite strong”, surging 20% to 53 million tonnes in the first eight months of this year, after a brief period of import control in November and December last year, she said.

“Overall, there will be some short-term price consolidation ahead,” Lau said. “Hopefully, the import control will help stabilise domestic prices, but seaborne prices may suffer.”

Futures prices of other steelmaking ingredients also sank, with Dalian coke closing down 3.9% at 1,886.60 yuan a tonne.

FUNDAMENTALS

* The most-traded Dalian iron ore slipped 2.4% to 622.50 yuan a tonne. The front-month iron ore contract on the Singapore Exchange was down 3.3% at $87.40 a tonne in late trade.

* Prices for spot cargoes of benchmark iron ore with 62% iron content for delivery to China SH-CCN-IRNOR62 steadied at $93 a tonne on Monday, having fallen from Sept. 16 level of $98, the highest since Aug. 6 this year.

* Steel output curbs in China and its trade war with the United States are the key headwinds for demand for steelmaking materials, said ANZ Research in its quarterly outlook.

* Falling steel inventories in China, however, should help keep prices of steel and steelmaking raw materials “relatively well-supported” in the coming months, ANZ commodity strategists Daniel Hynes and Soni Kumari said.

* China’s steel futures extended their rebound, with the most-active construction steel rebar contract on the Shanghai Futures Exchange ending 0.7% higher at 3,477 yuan a tonne.

* Hot-rolled steel coil, used in cars and home appliances, rose 1.2% to 3,501 yuan a tonne.

($1 = 7.1037 yuan)

Reporting by Enrico dela Cruz; Editing by Rashmi Aich and Sherry Jacob-Phillips

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