1. China’s coking coal softens on profit taking, but outlook firm

China’s coking coal softens on profit taking, but outlook firm

Chinese coking coal futures retreated on Thursday as investors locked in profits after a four-day rally, but the overall outlook remained firm due to the continued supply shortage and strong demand from steelmakers.

By: | Shanghai | Published: October 20, 2016 11:32 AM
China has aimed to cut overcapacity in its coal sector as part of efforts to push supply-side reforms, a move that has unexpectedly resulted in the months-long rally in coal prices and low inventories. (Reuters)

China has aimed to cut overcapacity in its coal sector as part of efforts to push supply-side reforms, a move that has unexpectedly resulted in the months-long rally in coal prices and low inventories. (Reuters)

Chinese coking coal futures retreated on Thursday as investors locked in profits after a four-day rally, but the overall outlook remained firm due to the continued supply shortage and strong demand from steelmakers.

Some bulls have cleared their positions after making profits by betting on rising prices. Coking coal futures on the Dalian Commodity Exchange have surged 43 percent since the end of August and 118 percent year-to-date.

“There is some short-term profit-taking, but the overall market remains positive in the near future as steel mills kept high production and have a strong appetite for coking coal and coke, while the coal shortage is not expected to ease soon,” said Bai Jing, an analyst with Galaxy Futures in Beijing.

The January contract slipped 0.7 percent to 1,215 yuan ($180.28) a tonne by the midday break.

China has aimed to cut overcapacity in its coal sector as part of efforts to push supply-side reforms, a move that has unexpectedly resulted in the months-long rally in coal prices and low inventories.

China has ordered major coal mines to raise output since September, but the effort has not been sufficient enough to boost supplies amid strong demand.

The most active rebar futures on the Shanghai Futures Exchange edged up 0.4 percent to 2,481 yuan a tonne and iron ore futures on the Dalian Commodity Exchange rose 0.8 percent to 445 yuan.

Iron ore for delivery to China’s Tianjin port <.IO62-CNI=SI> stood unchanged at $58 a tonne on Wednesday, according to data from The Steel Index.

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