Chinese coking coal futures extended losses to hit their lowest in four weeks on Wednesday, as traders kept an eye on a batch of Australian coal cargoes expected to arrive soon in top steel producer China.

Rising Chinese steel inventories also weighed on overall market sentiment, analysts said.

China is seen gradually resuming Australian coal imports, having eased an unofficial trade ban imposed in 2020, as signs of warming ties between the two countries have emerged.

Prices of the steelmaking ingredient have dropped nearly 5% since the start of the year.

The most-traded coking coal, for May delivery, on China’s Dalian Commodity Exchange, ended morning trade 4% lower at 1,788.50 yuan ($265.00) a tonne, after earlier hitting 1,787.50 yuan, its weakest since Jan. 6.

China is set to receive at least two cargoes of Australian coal in early February, Reuters reported on Monday, citing traders and ship-tracking data.

Five Australian coal cargoes were planned to be shipped initially to China and the market was “still relatively pessimistic” about the impact on prices, analysts at Zhongzhou Futures said in a note.

Coke, the processed form of coking coal, dropped 3.8% on the Dalian exchange.

Stocks held by mills was 16.1 million tonnes in mid-January, up 7.9% from the early part of the month, ING commodity strategists said in a note, citing industry data.

They added that crude steel production at major Chinese mills also edged higher during the same period.

Dalian iron ore’s most-active May contract slipped 0.4% to 869.50 yuan ($128.83) a tonne, while the steelmaking ingredient’s benchmark March contract on the Singapore Exchange was nearly flat at $127.15 a tonne.

Rebar on the Shanghai Futures Exchange fell 1.8%, hot-rolled coil dipped 2%, and wire rod shed 0.5%. Stainless steel edged up 0.1%.

Source: Reuters