Posted on 07 Sep 2021
Dalian Commodity Exchange (DCE) in Northeast China’s Liaoning province will lift speculative trading margins for all coking coal and coke futures contracts to 15% from 11% effective September 6, while keeping their limits on price movement unchanged at 8%, according to its announcement on September 2. Market sources suggested the exchange’s adjustments were another measure to cool the market’s frenzy and reduce risks for participants.
In response to the notable volatility of coking coal and coke futures prices in recent weeks, since August DCE has adopted new measures on at least five separate times including raising trading fee rates, controlling daily limits for new open interest, and lifting speculative trading margins for some contracts, as reported.
In addition, the exchange will control the daily limit of new open interest for both products for non-futures company members or clients to within 100 lots/day, effective the night session of September 3, according to its announcement the same day.
“The futures markets for coking coal and coke are much more sensitive to news or even rumours indicating adverse impact on the supply side,” said a Shanghai-based analyst.
Just on September 2, the most-traded coking coal contract on DCE for January 2022 delivery had jumped by 8% to touch limit up. The same day, the closing price of DCE’s January 2022 coke contract also surged 6.5% on day, according to exchange data.
Some sources attributed the jump in futures prices partly to the rumour that operations at a 6 million t/y coking coal mine in North China’s Shanxi had been idled after a worker was killed in a logistics accident at the mine on September 2.
“The steady climb in futures prices of both coking coal and coke mainly reflected their supply tightness in the physical market, particularly for coking coal,” the analyst said. Coking coal availability in China remains limited, affected by stringent safety surveillance at domestic mines and disruptions to imports, he explained, anticipating the country’s supply may increase with a series of measures to secure coal supply.
Contract price volatility of both coking coal and coke narrowed on Friday. On September 3, DCE’s January 2022 coking coal contract closed at Yuan 2,615/tonne ($404.8/t), up 0.7% from the settlement price on September 2, and that for coke increased 0.8% on day to Yuan 3,336.5/t, according to DCE’s data.
Source:Mysteel Global
