From Macquarie:
Detailed Chinese trade data for September once again illustrates the dichotomy between the thermal and met coal markets when it comes to seaborne supply flexibility. Thermal coal imports rose to 203mtpa, up 1% MoM and 44% YoY, to the highest rate since mid-2014. Meanwhile, seaborne coking coal imports fell 28% MoM to just 37mtpa. Even if we incorporate stronger volumes from Mongolia, total coking coal imports were down sequentially. We maintain that the relative lack of supply flexibility in the met coal market will make it less vulnerable to a sell-off if a change in Chinese supply policy leads to a collective softening of the coal markets.
Speaking of changes in Chinese policy, the NDRC will hold a meeting on Tuesday, 25 October, to, among other things, ‘stabilise’ the coal supply situation. The meeting was summoned at short notice and asked chairmen or CEOs of the invited companies (ie, the top decision makers) to attend. Both thermal and met coal companies have been invited, with the inference that further industrywide softening measures could be introduced. In advance of the meeting, Zhengzhou Commodity Exchange (ZCE) coal transaction fees have been increased.
