Coking coal retreats on profit-taking activities
BEIJING - Prices of coking coal futures in China retreated on Monday, as investors closed long positions to cash in profits after the steelmaking ingredient's dramatic price rally prompted the Dalian exchange to limit positions.
The most-traded coking coal DJMcv1 on China's Dalian Commodity Exchange (DCE) closed daytime trade 11% lower to hit a limit down at 1 100.5 yuan ($153.47) a metric ton. Prices touched the daily upper limit for five consecutive trading sessions, gaining 33% last week.
The Dalian exchange's announcement triggered a price slump, ending the contract's seven-day rally fuelled by growing expectations of a supply reduction after the National Energy Administration ordered inspections at mines in major coal production hubs to check for excess production.
"Speculative sentiment receded and some investors liquidated long positions to avert risks after the Dalian exchange imposed restrictions on positions holding, thus resulting in a steep price fall," said Zhou Tao, an analyst at broker Galaxy Futures.
Coke DCJcv1 also hit the limit down, falling 7.98%.
The market had bet Beijing is finally serious about addressing overcapacity in several sectors, sending prices of multiple commodities, including coking coal and coke, soaring in the past month.
Prices of key steelmaking ingredient iron ore also softened on Monday, as investors awaited clear cues from the upcoming high-level Politburo meeting expected by end-July and the fresh trade talks between the world's two largest economies.
The most-traded September iron ore contract DCIOcv1 ended daytime trade 1.75% lower at 786 yuan a ton, and the benchmark September iron ore SZZFU5 on the Singapore Exchange slipped 2.31% to $100.9 a ton, as of 07:23 GMT.
Steel benchmarks on the Shanghai Futures Exchange lost ground amid lower raw materials costs.
Rebar SRBcv1 shed 2.05%, hot-rolled coil SHHCcv1 lost 2.3%, wire rod SWRcv1 slipped 2.92% and stainless steel SHSScv1 dipped 0.73%.
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