Chinese coking coal hits 19-month high on supply concerns

Chinese coking coal prices rallied on Monday to hit a 19-month high, as a provincial-level mine safety meeting in coal-rich Shanxi reinforced supply concerns stoked by production halts at some mines following a deadly accident last month.

Shanxi in northern China held a meeting on Saturday on a special rectification campaign for safety risks and hidden dangers in coal mines, according to a WeChat post from local official media on Sunday.

Officials at China’s top coal production hub pledged to adopt a “zero-tolerance approach” to precisely identify and severely punish illegal acts such as hidden tunnels, safety monitoring fraud, and illegal mining beyond the permitted area and layers.

In late May, a fatal mine accident in Shanxi’s Liushenyu mine killed at least 82 people, triggering a raft of stringent mine safety inspections that have propelled several mines to suspend production and fanned fears of tight supply.

“The severity and scope of the accident are particularly extensive, leaving limited space for a rapid production resumption in the short run,” analysts at broker Xinhu Futures said in a note.

The most-traded coking coal contract on the Dalian Commodity Exchange (DCE) closed daytime trade up 7.16% to 1,377 yuan ($203.51) per metric ton. The contract touched its highest level since October 30, 2024 at 1,387.5 yuan earlier in the session.

The most-active DCE coke contract jumped by 4.84% to 1,993 yuan a ton after hitting the highest since November 8, 2024 at 2,026.5 yuan earlier.

Iron ore prices lost ground amid expectation of a supply glut due to rising shipments and seasonally slow demand.

The most-active DCE contract dipped 0.19% to 781 yuan a ton, while the benchmark July iron ore on the Singapore Exchange was 0.61% lower at $104.6 a ton by 0757.

Steel benchmarks on the Shanghai Futures Exchange mostly advanced. Rebar added 0.63%, hot-rolled coil gained 0.65% and wire rod climbed 1.1% while stainless steel fell 0.37%.

($1 = 6.7663 Chinese yuan)

(By Amy Lv and Lewis Jackson; Editing by Subhranshu Sahu)