January 11, 2019 / 8:41 AM / 10 days ago

UPDATE 1-Dalian coking coal gains over 3 pct on tight supply concerns

    * Some coal miners to halt operations for safety inspection
- SSN
    * Steel inventory up 453,200 tonnes to 8.83 mln tonnes -
Mysteel
    * Traders take cautious approach towards winter restocking
    * Mill utilisation rates rise to 64.36 percent - Mysteel

 (Adds coal mines inspections, Sino-U.S. trade talks, and
updates closing prices)
    BEIJING, Jan 11 (Reuters) - China's coking coal prices
soared more than 3 percent to hit a five-week peak on Friday,
fuelled by tight supply concerns as a safety watchdog plans to
carry out inspections at coal mines in northern China.
    Some miners in major coal mining hubs of Shandong, Henan and
regions in northeastern China have received notices from the
National Coal Mine Safety Administration that have asked them to
halt operation for inspections, the state-backed Shanghai
Securities News (SSN) reported on Friday.
    The inspections will last six months until June-end,
according to a statement from the administration.
    Analysts expect the disruption in production to affect 92.06
million tonnes in coal mining hubs, with coking coal and gas
coal being the most affected.
    The most-active coking coal futures on the Dalian Commodity
Exchange          rose 3.5 percent to 1,233 yuan ($182.91) a
tonne, just shy of Friday's high of 1,234 yuan, a level last
seen on Dec. 7, 2018. 
    Coke prices          climbed 2.2 percent to 1,982 yuan.
    Chinese construction steel rebar futures          clawed
back some lost ground before the market closed at 0700 GMT.
    Steel rebar inched up 0.4 percent to 3,539 yuan a tonne amid
reports the United States and China were making headway in their
talks on trade. 
    U.S. officials expect China's top trade negotiator may visit
Washington this month, signalling that higher-level discussions
are likely to follow this week's talks with mid-level officials
in Beijing as the world's two largest economies try to hammer
out a deal to end a tit-for-tat tariff war.            
    However, investors remain largely cautious amid concerns
about the state of the economy.
    Stocks of steel products held by Chinese traders, an
indicator of demand in the country, rose by 453,200 tonnes to
8.83 million tonnes, as of Jan. 11, data compiled by Mysteel
Consultancy showed.
    Traders typically replenish their stocks ahead of the
Chinese new year break, due in early February this year, and
sell them when downstream users go back to work after the
week-long holiday.
    Winter stocking has begun in some regions, but most traders
are still on the sidelines, said analysts from Huatai Futures
and CITIC Futures, adding that the restocking process has been
slower than the previous year.
    "Many people have learnt lessons from last year's loss and
don't want to hoard too much this year ... and there is still
not enough direct stimulus from the central government to
support steel demand," said a steel trader in northeastern
province of Liaoning.
    Traders stocked up heavily before the new year holiday last
year, but many lost money when demand turned to be weaker than
expected, driving steel prices down nearly 20 percent within a
month.
    Weekly utilisation rates at steel mills across the country
reached 64.36 percent this week, as of Jan.11, up 0.14
percentage points from previous week, data tracked by Mysteel
showed.
    The most-traded iron ore contract for May delivery on the
Dalian Commodity Exchange           edged 0.2 percent higher to
509 yuan a tonne.   

    ($1 = 6.7411 Chinese yuan)

 (Reporting by Muyu Xu and Dominique Patton; Editing by Richard
Pullin and Sherry Jacob-Phillips)
  
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