China is increasingly relying on coking-coal shipments from abroad due to local shortage
The price of coal needed to make steel has surged more than 45% over the past three weeks, to its highest level since early 2013, on rising Chinese demand for foreign supply owing to a shortage at home.
China has raced to buy up coal shipments for its mammoth steel industry, whose excessive output most recently drew criticism from global leaders at the meeting of the Group of 20 major economies that ended Monday.
The price for premium coking coal exported from Australia, the world’s biggest shipper of the commodity, jumped to $158.40 a metric ton Tuesday, according to the Steel Index, a price information provider. That was up 4.1% from Monday and more than double the $78 a ton sellers were getting for their coal at the start of this year. Tuesday’s price was the highest since March 18, 2013, when the commodity traded a little over $159 a ton.
The rally has broken a five-year downturn in prices globally that sparked widespread layoffs and resulted in some coal mines closing or cutting production.
One of the main reasons for the current global supply shortfall is curbs that China placed on domestic coal production in April, limiting the number of days miners can work, in an effort to overhaul the bloated sector. In addition, heavy rains across China’s northern coalfields have caused disruptions to local mines and railways.
For the rest of this article, click here: http://www.wsj.com/articles/chinas-demand-fuels-rally-in-price-of-coal-for-steelmaking-1473155366