MANILA: Coking coal prices in China tumbled to a seven-month low on Wednesday, weighed down by prospects of higher supply and sustained weakness in demand for the steelmaking raw material, while fresh hopes of economic stimulus supported iron ore.

The most-traded September coking coal contract on the Dalian Commodity Exchange ended daytime trade 6.7% lower at 1,922.50 yuan ($284.78) a tonne, after hitting 1,885.50 yuan, its weakest level since Dec. 13.

Coke, the processed form of coking coal used in iron ore smelting, shed 3.6% to 2,590.50 yuan a tonne. “Demand for raw materials has declined due to a reduction in steel mill production,” Sinosteel Futures analysts said in a note.

Top steel producer China aims to reduce output for a second consecutive year in line with its decarbonisation goals. Steel mills have also cut production more decisively due to weak demand as COVID-19 restrictions curbed economic activity and bad weather hampered construction projects.

An accumulation of coking coal supply at ports following recent COVID-19 curbs in Inner Mongolia, a key source of the material, is also adding pressure on prices, along with talks of China ending its unofficial ban on importing Australian coal.

“The market’s attention to Australian coal has increased recently,” Sinosteel analysts said.

“(But) it is still unclear whether Australian coal can resume customs clearance.” Dalian iron ore’s benchmark September contract slipped 0.4%, while the steelmaking ingredient’s front-month August contract on the Singapore Exchange was up 2.6% at $99.70 a tonne, as of 0700 GMT.

Chinese Premier Li Keqiang on Tuesday said “painstaking” efforts were needed to stabilise the economy’s overall performance. Iron ore was also supported after Brazilian miner Vale SA cut its 2022 iron ore production forecast. Rebar on the Shanghai Futures Exchange climbed 0.4%, while hot-rolled coil and stainless steel both gained 0.6%.