By James Wellstead — Exclusive to Coal Investing News
Coal prices appear to have entered a holding pattern in recent weeks as sell bids h ave fallen silent in the face of uncertain fundamental cues. With weak macroeconomic figures leading to increased fears of a slowdown in Asian markets, traders remained quiet in a market that has yet to settle on contract prices for both thermal and coking coal in the Asia-Pacific and European regions. News of slowing demand coming out of both energy and steel markets in Asia has been the major driving force shaping coal markets across the globe. While the Chinese economy remains on track to grow 8.5 percent this year, it is the lowest rate of growth in three years for the world's second-largest economy. Reuters recently reported that Yu Bin, director of the macroeconomic research department at the Development Research Centre, said he “believe[s] prices of major commodities, including oil, will hover at high levels this year,” which may inhibit the country's overall growth trend. News of China's highest trade deficit in 20 years has also raised concerns that China's commodity-dependent export markets have been hit by the broader slowdown within the economy. The deficit also indicates that Chinese consumers have been investing more heavily locally, although it appears that this activity has done more to drive inflation fears than to spark robust demand. Inflation worries are a concern for the Chinese the government. Zhang Ping, Director of the National Development and Reform Commission, recently announced that managing inflation will remain a central priority for the country. While overall inflation levels are beneath the government's four percent target, rising price levels in China's property and commodities markets are two areas of concern for the government and for investors given China's huge imports of raw materials. Coking coal China's souring steel sector has seen coking prices slide lower as fears of contracting capital and inflation in the housing and construction sectors remain.