Sluggish coking coal demand from China is a key factor behind the bearish outlook for seaborne coking coal in the short term, said Ghee Peh, head of the Asian Metals and Mining Research of UBS at the 5th Coaltrans summit in Hong Kong, Tuesday.
"Supply is pretty straight forward ... but demand is where the real problem is ... demand is quite anemic," Ghee said.
"Chinese mills have been shutting down," Ghee said, adding that there was hardly any demand for steel this summer.
Prices of premium low-volatile Australian coking coal have fallen by $63/mt in the last two months to $171.50/mt CFR North China as of Monday, Platts data shows.
Continued decline in competitively priced Chinese domestic met coal is also expected to put pressure on seaborne coking coal prices in the short term. "I expect local (Chinese) producers may further cut costs to boost sales and speed up receivables turnover," Ghee said.
While a Chinese recovery is expected, it's still not certain when it will happen, Ghee said.
