Import figures, compiled by Iman Resources from port sources, for the month of June 2020 reveal that India’s #Coking #Coal Imports for the month stood at 2.49 Million Metric Tons (MMT) down by 27% year-on-year (yoy)  and 12% lower month-on-month  (mom)

Indian Coking coal imports totaled 4.89 MMT in  June 2019 and 2.85 MMT in May 2020

In CY 2019, imports of Coking Coal stood at 48.79 MMT, against 51.90 MMT 2018, 45.93 MMT in 2017 and 42.72 MMT in 2016.

Steel Production Growth

Indian steel production has contracted sharply in the April-June quarter and most steel plants have not yet ramped up back to full capacity. As a result, many steel majors have delayed their import shipments to adjust for the lower production rates.

Declining for the third straight month, the country’s crude steel output fell 39 per cent to 5.76 MMT in May, according to World Steel Association (worldsteel).

The country had produced 9.46 MMT of crude steel during the same month a year ago, worldsteel said in its latest report. At 5.76 MMT in May, India’s output was down for the third straight month since March.

In March, India produced 8.65 MMT of crude steel, down 14 per cent from 10.4 MMT in the same month previous year.

The country in April produced 3.13 MMT steel, registering over 65 per cent fall as compared to 9.02 MMT.

Worldsteel further said the global steel output in May 2020 was also down by 8.7 per cent to 148.77 MMT as compared with 163.01 MMT.

However, China’s crude steel output jumped 8.5% from a month earlier in May, hitting the highest ever in records published for single-month production, lifted by a construction boom amid a Beijing infrastructure development push and a recovery in manufacturing.

The world’s largest steel producer made 92.27 MMT of crude steel last month, data from the National Bureau of Statistics (NBS) showed on Monday, up from 85.03 MMT in April and 4.2% higher than in May 2019.

The May number was the highest for any single month in NBS records. China typically publishes one combined number in data for January and February each year without breaking out details of each month.

Average daily output of the metal stood at 2.98 MMT in May compared with 2.83 MMT in April, according to Reuters calculations based on the official data, also a record level.

For the first five months of the year, China produced 411.75 MMT of crude steel, up 1.9% from the same period in 2019, the NBS data showed.

The surge in production came amid continuously falling inventories and firm demand from infrastructure projects and a resilient property market, with the world’s second-biggest economy back in business after emerging from coronavirus lockdown curbs.

“Developers are ramping up on better house sales, looser credit and marginal relaxation of housing restrictions on the local governments’ level,” Zhilu Wang from Wood Mackenzie said before the data was released, adding that auto and machinery sectors are also warming up.

Capacity utilisation rates at blast furnaces in 247 mills across China surged to 91.4% as of May 29, compared with 81.7% at end-April, data compiled by Chinese steel consultancy Mysteel showed.

However, The continuous four-month rally in daily crude steel production among the 318 Chinese steel mills monitored by MySteel  came to a gradual end earlier this month, with the tonnage retreating by 18,800 tonnes/day or 0.6% from late-June’s record high to average 2.98 million t/d over July 1-10, as more steelmakers commenced maintenance during the traditional off season for steel consumption.

The 318 steel producers under Mysteel’s regular survey comprise247 blast-furnace and 71 electric-arc-furnace steel producers across China. The latest result in early July still represented an increase of 4.4% from one year ago, indicating that most steel producers maintained high production during the first ten days of this month as profit margins remained reasonable.

Outlook for coking coal prices

Despite the strong steel production growth in China to record monthly highs, Argus reports that Asia-Pacific coking coal prices fell further as August-loading premium low-volatile material traded lower on falling offers, with sellers continuing to exit their positions.

First tier prices into China fell by $1.80/t to $123.35/t on a cfr basis, while second-tier prices were unchanged at $105/t cfr north China.

Premium hard coking coal prices on a fob basis for Australian exports fell by 50¢/t to $113.40/t, and tier-two mid-volatile prices were unchanged at $92/t fob Australia.

However, it is expected that Q4 pricing will be much stronger, provided China’s production levels stay strong and Indian production returns to pre-pandemic levels. The monsoon season is typically a low demand period and if India manages to contain the virus and flatten the curve, we can expect a strong rebound to steel production in the fourth quarter and likely higher coking coal prices too.

This analysis has been compiled by obtaining data from Iman Resources’ sources.

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