China’s domestic coal production is breaking records, rising above 12 Mt/d in the past weeks (up from 10.81 Mt/d in August).
The country’s National Coal Industry Association (NCIA) has flagged expectations that the top producing regions will hit new output highs in the next few months, though safety and environmental checks could disrupt supplies from certain regions, as could severe weather.
In a context of lower coal demand due to a wider economic downturn, import demand is weakening, fueling fears of a return of import controls in 2022.
January 2022 prices on the China Zhengzhou Commodity Exchange closed at $128.413/t on Friday, down by 1.5% week-on-week.
By contrast, the trend was bullish on the other markets. API2 Cal 2022 prices closed at $118.01/t on Friday, up by $11.51 week-on-week.
The coal market is torn between bearish fundamentals in China and more bullish fundamentals elsewhere. Therefore, we expect API2 Cal 2022 prices to continue to be relatively stable around their current levels.
Source: Energyscan
