21 Jul 2009 15:22

Shandong association launches international tender for coking coal

Shanghai. July 21. INTERFAX-CHINA - The Shandong Coking Industry Association (SDCIA) launched a tender on July 20 to purchase 5 million tons of coking coal from both domestic and international producers, state media reported on July 21.

The SDCIA aims to purchase eight types of coking coal through the tender, including gas coal, fat coal, meager lean coal and primary coking coal, Xinhua news agency reported. The tender is scheduled to close on Aug. 9.

Along with domestic suppliers, more than 10 overseas mining companies and traders have also submitted bids, including Glencore International AG, Pan Asia Mining Corp. and IMR Metallurgical Resources AG.

Because the international steel market is in poorer shape than the domestic market, overseas coking coal demand has shrunk more than it has in China and foreign coking coal prices are lower than domestic prices, Feng Jinjin, a coal analyst with Umetal, told Interfax.

An anonymous employee with Shanxi Coking Co. Ltd., a large Chinese coke producer, told Interfax that cheaper prices led the company to import more coking coal than usual from the overseas market, especially at the end of 2008 and at the beginning of 2009.

"CIF coking coal prices in Shandong are RMB 100 ($14.64) per ton lower than local prices now," Feng said.

However, it appears that overseas prices may be on their way up. International coking coal prices have been rising due to growing exports to China and the recovery of the overseas steel industry, Feng said. Nonetheless, overseas coking coal supplies are still competitive in the domestic market.

Feng noted that growing coking coal imports are more noticeable in some of the coastal regions, including Shandong, Hebei and Fujian provinces. Furthermore, suspensions of some small-scale coalmines this year has also made it harder for domestic coke producers to source coking coal at home.

According to General Administration Customs statistics, China imported 8.25 million tons of coking coal in the first five months, soaring by about 250 percent year-on-year.