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China’s most-traded coking coal futures contract on the Dalian Commodity Exchange, for May delivery, tumbles more than 5% to hit a low of 1,677.5 yuan per tonne. The most active coke futures contract on the bourse slid more than 3% to hit a low of 2,297 yuan per tonne.
The slide came after the contract rallied last week on expectation of tighter supply after Shanxi province, China’s top coal production hub, ordered coal miners to curb overproduction.
Coal miners in Shanxi were asked to reduce output and carry out safety checks from March to May, according to the notice released by the provincial emergency management, mine safety and energy bureau. The province produces 29% of China’s coal supply, including thermal coal for power plants and coking coal, a key steelmaking ingredient.
The order could reduce supply by a combined 5 million to 6 million metric tons for two major producers, Shanxi Coal International Energy Group and Shanxi Luan Group, brokerage China Futures said in a note. “The influence might not merely be confined to the two companies, and this is what the market is concerned about.”
