Back in saddle after this morning’s dummy spit, Credit Suisse has some of the finer detail driving the coking coal rebound:
China struggling to meet demand
China demand is stronger than anticipated due to solid steel production, which is probably enhanced by the closure of induction furnaces and their replacement with blast furnace steel. Against solid demand, mine output has been hampered by heavy summer rainfall, and frequent mine inspections to enforce safety rules. The government is “really cracking down” to insure the safety of mines, a source told Inside Coal. These factors led four major coking coal groups (Shanxi Coking Coal Group, Heilongjiang Longmei Group, Anhui Huaibei Group and Henan Pingdingshan Group) to announce in late-June that they would throttle-back production in 3Q.
