Chinese coking coal futures extended declines on signs importers are taking more supplies from overseas just as the market heads into a seasonal period of weaker demand.
Futures of the fuel used in steelmaking fell as much as 2.4% in Dalian on Monday, dropping for a fifth straight session. They’ve lost around 15% so far in November, and are on track for the worst month since May.
Demand for coking coal typically subsides as China heads into winter, when slowing construction activity leads to lower steel consumption. The downward impact on prices this year is being exacerbated by high volumes of imports from Australia, where prices have become more competitive, as well as a seasonal uptick in Mongolian coal exports.
“Australian coal will directly replenish the coastal market’s high-quality coking coal inventories,” Cao Ying, chief ferrous analyst at SDIC Futures Co., said in a note. “Combined with Mongolian coal, this creates a significant supply shock to the domestic coking coal market.”
Coking coal futures dropped 0.3% to 1,100 yuan ($155) a ton in Dalian as of 11:10 a.m. local time. Iron ore contracts rose 0.9% to $104.90 a ton in Singapore, while steel contracts advanced in Shanghai.