The price of equipment for China’s major steel companies has skyrocketed as Beijing tries to recoup prices.
The highest quality coal exported to China has risen above $ 300 per tonne for the first time since 2017, about 150% since October, due to squeezing that has left steel mills struggling and paying a much higher price than competitors around the world.
Rising prices reflect the challenges China faces in trying to cool the red market, which has identified a major threat to economic recovery, as well as foreign investment.
China is a successful coal producer, unlike many other commodities, domestic mining provides about 80% of its needs. But the size of its steel industry means that it still sells about 65m tons a year for steel production.
The bulk of the population comes from Australia. Then in October, Beijing resigned non-coal-based blockade from the country as a result of discussions between them and Canberra on the causes of the coronavirus problem.
“Removal of Australia from this image last year reduced the supply of coal to China and these figures show this,” said Julien Hall, Asia’s steel timber manager at S&P Global Platts
Between January and May this year, China shipped 18.2 tons of coal from all regions, down from 31.7m tons in the same period in 2020, according to S&P.
At the same time, the production of domestic coal collapsed, due to difficulties in monitoring and evaluation of the environment, which marked the 100th birthday of the Communist Party on July 1.
“With 30 to 40% of banned emissions in the Shanxi production area, and the Mongolian border being closed, coal prices in China continue to rise,” said Colin Hamilton, a researcher at BMO Capital Markets. Mongolia is another supplier to China.
At the moment there is little sign of rising coal prices being closely monitored by policymakers in Beijing. However, this could change as prices continue to rise.
Letter of mail twice a week
Energy is the most important business in the world and Source Source is his story. Every Tuesday and Thursday, directly in your email, Energy Source brings you important news, future analysis and in-depth insight. Sign in here.
The rise in prices of iron ore – another major source of iron ore – has been quite impressive. Earlier this week, China’s leading agency, the National Development and Reform Commission, said the search “Just a myth” on metal metal trading platforms and “severe punishment” for any wrongdoing.
There have been only three other Chinese coal-fired events that have sold more than $ 300 per tonne. The most recent occurred in 2017 after a hurricane disrupted Australian cargo.
“Given the rise in prices, it would be absurd to assume that Chinese steelmakers would be more open to the opening of the export market,” Hall said.
The researchers say Australia’s ban on imports is a major reason why Chinese arms manufacturers have paid more for coal production than their competitors around the world. The cost of entry into India plus shipping cost is about $ 205 per tonne, while China is about $ 100 higher, according to S&P Global Platts.
However, the Australian strike has been a boon to North American coal-producing companies, which have grown significantly in China.
In May it shipped 700,000 tons to China, up from just one ton the same month last year. Miners in Indonesia, Colombia, and Mozambique have also shipped their goods to China.
Source link
