MANILA (Reuters) - Chinese coking coal futures slipped on Friday and logged their biggest weekly loss since November 2018, as slowing economic growth and a bruising U.S.-China trade war clouded demand outlook for the steelmaking raw material.
Trading volumes were thin, however, in China’s ferrous complex ahead of a long holiday in the world’s top metals consumer.
The most-traded coking coal on the Dalian Commodity Exchange, for delivery in January 2020, ended down 1.5% at 1,236 yuan ($173.38) a tonne and was down 4.4% for the week.
Coke, the steelmaking material produced by heating coking coal, dropped 0.9% to 1,876 yuan a tonne and was down 3.6% this week, its biggest weekly drop in two months.
Many Chinese steel mills have been ordered to shut or limit operations starting this week under a strict anti-pollution campaign as the nation prepares to mark the 70th anniversary of the People’s Republic on Oct. 1, when the week-long holidays will begin.
Beyond the holidays, the demand outlook for steel products and raw materials in China is uncertain as latest economic indicators show a deepening slowdown, with profits at industrial firms contracting in August.
Doubts remain on whether China and the United States would be able to settle their trade conflict soon, despite U.S. President Donald Trump’s remarks on Wednesday saying a deal could happen sooner than people think.
“Understandably, investors are showing little reaction (to Trump’s remarks), as they have learned that things could easily turn and have gotten whip-sawed by getting ahead of their skis in the past,” said Edward Meir, commodity consultant at brokerage INTL FCStone.
The key near-term event to watch will be whether Trump delays the proposed additional 5% tariff hike on $250 billion of Chinese imports that will take effect on Oct. 15.
“If this tariff is implemented, we would expect trade tensions to escalate sharply, with China likely announcing counter-measures such as its new unreliable entity list,” Nomura said in a note.