Coal firm forced to cut prices amid bleak market

Yanzhou Coal Mining, a major mining company in eastern China, has cut coke prices for the fourth time this year by as much as 10 percent, according to National Business Daily.

"The supply of coke outstrips demand. Worse still, the iron and steel coking industry is operating at low profits or even at a loss," Zhang Zhibin, an analyst with SCI International, a commodity market consultancy, told National Business Daily. "It was inevitable that Yanzhou would cut its prices."

Yanzhou's coke prices in July have fallen by 70 to 85 yuan ($11.4 to $13.8) per ton. The biggest plunge happened in April by 130 yuan per ton, followed by another two drops of 60 and 30 yuan per ton in May and June, according to SCI International. The price now stands at 800 to 885 yuan per ton.

Yanzhou Coal Mining, as a leading company in Shandong province, has seen its counterparts follow suit. "Local coalmines have all started to slash prices. Those who have not taken action are waiting for the approval of their parent companies," said Bian Jianfeng, an analyst with SCI International.

Chen Zhexiang, an analyst with the private think tank Anbound, told National Business Daily that the price cutting is bound to have a negative impact on the overall industry. Judging from the current pessimism prevailing in the market, the industry is bracing for a prolonged period of sluggish performance, he said.