Russian coking coal export prices retreat as weak Chinese steel demand weighs

Prices surrender supply-shock gains

The export price of coking coal from Russia’s Kuzbass region fell 7.5% over the month to July 17, reaching $148 per tonne FOB at Far Eastern ports, according to a review by the Center for Price Indices, or CPI, cited by Kommersant. The quotation declined 3.3% between July 10 and July 17. Pulverized coal injection fuel, known as PCI, dropped 2.7% over the week to $144 per tonne after remaining at $148 per tonne from June 12.

The retreat returned Russian metallurgical coal prices to levels seen at the end of May. An accident at a mine in China’s Shanxi province had temporarily lifted the index for Russian fat coking coal delivered to China to $173 per tonne CFR. CPI said the force-majeure effect no longer supports the market.

The accident and subsequent mine safety inspections reduced Chinese coal production by 10% year on year in June to 381 million tonnes, the largest decline since 2016, according to China’s National Bureau of Statistics data cited by analysts. Mysteel Global reported that supply disruptions led to Russian coking coal being shipped from Chinese ports into Shanxi. Despite the June contraction, Chinese output in January-June rose 1% year on year to 2.4 billion tonnes.

Steel-sector losses cap raw-material demand

Weak conditions in China’s steel industry have replaced the temporary supply shock as the main price driver. CPI director Evgeny Grachev said most Chinese steel enterprises expected losses for the first six months and that there were no grounds to anticipate a substantial increase in demand before year-end.

Finished-steel inventories in China’s main markets reached 9.4 million tonnes at the end of June, up 21% from a year earlier, according to the CPI review. Finished-product prices continued to decline despite the rise in raw-material prices in May. Rainy weather and persistent problems in China’s property sector weakened steel demand, while metal prices at Chinese ports also fell. Lower margins on higher-value steel products consequently passed pressure down to coal and other inputs.

Russian exports nevertheless benefited from the earlier price spike. CPI estimated that Russian coking coal exports increased 34% year on year in the first half, with growth accelerating toward June. Sxcoal data showed that China imported 3.17 million tonnes of Russian metallurgical coal in June, up 24.8% from May and 36% from a year earlier, the highest volume since April.

Exporters face a weaker second half

China traditionally accounts for about 50% of Russia’s coking coal exports, Grachev said. Suppliers are trying to diversify shipments toward emerging Southeast Asian markets, but their capacity to absorb additional volumes is limited. That leaves Russian exporters heavily exposed to Chinese steel production, mill profitability and domestic mine output.

T-Investments senior analyst Akhmed Aliyev expects prices to fall 10–20% compared with the first half. He linked the outlook to recovering production in Australia, a gradual easing of safety inspections at Chinese mines and continued weakness across the global steel industry. Expert RA junior director for corporate ratings Oleg Emelchenkov expects Russian export prices to trade at $140–155 per tonne FOB Far East and move toward the bottom of that range by the end of the third quarter.

Emelchenkov said only unexpected external shocks, including major logistics disruption or weather-related interruptions to Australian production, could support quotations. India could offer some growth through discounts or disruptions affecting competing suppliers, although its market is also weakening. BigMint estimated that India’s premium coking coal index was approaching a four-month low amid high port inventories and weak steel demand. India cut metallurgical coal imports by 25% from May to 5.6 million tonnes in June, with Russia ranking as its second-largest supplier after Australia.