Dalian coking coal futures rose on Tuesday to their highest level in more than two months as market participants welcomed the new year feeling optimistic about demand prospects for the steelmaking input in top steel producer China.
The most-traded May coking coal contract on China's Dalian Commodity Exchange surged as much as 7.2% to 2,370.50 yuan a tonne on the first trading day of the 2022, its strongest since Oct. 28.
Coke, the processed form of coking coal and which is used as the primary reducing agent of the main steelmaking raw material iron ore, rose as much as 4.8% to 3,047 yuan a tonne, its highest since Dec. 27.
"The price of coking coal is firm, supporting coke. In the short term, steel mills will gradually resume production, which is good for coke demand," Sinosteel Futures analysts said in a note.
Speculations about supply of coking coal tightening also spurred interest in the material, as Indonesia has banned exports of coal because of concerns it could not meet its own demand for the power generation input.
It was unclear, however, if the Indonesian export ban would also have an impact on metallurgical coal supply to China.
Tracking gains in other steelmaking inputs, Dalian iron ore erased early losses and jumped as much as 2.5% to 691 yuan a tonne, its highest since Dec. 27.
On the Singapore Exchange, the most-active February iron ore contract was down 0.8% at $121 a tonne by 0307 GMT.
Analysts, however, advised market participants to temper their demand expectations for steelmaking raw materials, especially with the upcoming Chinese Spring Festival holidays and the Beijing Winter Olympics next month, when steel mills will curb operations.
Rebar on the Shanghai Futures Exchange rose as much as 2%, while hot-rolled coil climbed 1.8%. Stainless steel advanced 2.3%.
Comments
Comments are closed for this article.