Overview
China recorded a rise in coking coal prices for the week ended June 5, driven by sustained disruptions at producing mines in major regions. High-grade Liulin No.4 reached 1,930 yuan per ton, a 14% week-over-week increase. Meanwhile, the QHD 5,500 kcal thermal coal benchmark rose 1.1% to 863 yuan per ton, even as mine pit prices fell across Shanxi, Shaanxi and Inner Mongolia.
Mine suspensions and capacity impact
As of June 5, a total of 59 coking coal mines in five cities within Shanxi province remained suspended, representing roughly 62.9 million tons per annum of capacity, according to Sxcoal. The count of suspended mines declined to 59 from the May 25 level, and suspended capacity dropped by 71.6 million tons over that interval.
Frequent mine-level safety inspections continued to influence operations. Several mines that have resumed or remain active have curtailed output or eliminated night shifts. These adjustments stem from safety requirements, inspection pressure and issues related to prior overproduction, resulting in production levels that are lower than in earlier periods.
Inventory and burn dynamics
Port inventories at Northern and Southern ports fell 1.1% week-over-week to 23.0 million tons as of June 4. By contrast, stocks held by the six major independent power producers rose 0.2% to 13.5 million tons. At the same time, the daily coal burn rate increased by 2.0% to 830,000 tons, reflecting stronger offtake from those power generators.
International prices and spreads
On the international front, the Newcastle 6,000K price climbed 13.3% week-over-week to $148.75 per ton, trading at a 33% premium relative to the QHD price.
Near-term supply outlook
Bank of America noted that supply at production origins is likely to remain subdued in the near term. The combination of suspended mines, inspection-driven output reductions and adjustments to shift patterns underpins that assessment.
Data points cited in this report
- Liulin No.4 high-grade coking coal: 1,930 yuan/ton, +14% w/w
- QHD 5,500 kcal thermal coal: 863 yuan/ton, +1.1% w/w
- Suspended coking coal mines in Shanxi: 59 mines; ~62.9 million tpa capacity suspended
- Change in suspended capacity since May 25: -71.6 million tons
- Port inventory (Northern and Southern ports): 23.0 million tons, -1.1% w/w as of June 4
- Inventory at six major independent power producers: 13.5 million tons, +0.2%
- Daily burn rate: 830,000 tons, +2.0%
- Newcastle 6,000K price: $148.75/ton, +13.3% w/w; 33% premium to QHD
Implications
The immediate picture is one of constrained origin supply due to concentrated suspensions and safety-related production limits. Port inventories have edged lower overall, even as power-plant holdings and daily burn rose slightly, indicating active demand at the generation level. These dynamics have supported both domestic coking coal prices and an elevated Newcastle premium versus QHD.
Conclusion
With frequent safety inspections and residual suspension of capacity in Shanxi, production at origin is expected to remain subdued in the near term, according to BofA. Market participants will likely monitor mine reopening progress, inspection outcomes and inventory movement at ports and major power producers for signs of a supply shift.