January 14, 2019 - A spate of fatal mining accidents has again compelled Chinese authorities to impose strict safety checks on mines, raising concerns of tightening domestic coking coal supplies.

China's national coal mine safety administration has ordered mines in Shandong and Henan provinces susceptible to coal bursts, gas explosions and fires to be shut so that safety inspections can be carried out. Affected mines can only be restarted after they receive approval from the authorities.

While some steel producers initially brushed off the inspections as routine pre-lunar new year safety checks, another mining accident on 12 January at a thermal coal mine in Shaanxi province that left 21 workers dead has raised concerns that authorities will tighten safety checks further to prevent more accidents like these from happening.

Some coking coal mines announced a cut in purchase prices just last week by about 20-40 yuan/t ($2.96-5.92/t) on expectations that mine production will return to normal levels by the end of the northern winter season.

But the same mines have reverted purchase prices back to the original levels after word of renewed safety inspections spread.

Provincial authorities have the power to order all mines in a region, even those without a history of accidents, to shut temporarily for precautionary safety inspections, market participants said. This has the potential to tighten supplies within a short time and drive prices up.

"There was another mining-related death at one of the coking coal mines at Linfen city in Shanxi province recently," a Shanghai-based trader said. "These might look like isolated incidents but the accidents have increased in frequency lately, creating a good enough reason for authorities to do something drastic."

Mining accidents in China were a fairly common occurrence up until 2017, when increased safety inspections were effective in improving safety standards at most mines. Fatal mining accidents are viewed as a smear on the country's reputation and the Chinese government has stated that they will no longer be tolerated.

Seaborne coking coal prices have softened as the vessel queue at the Dalrymple Bay Coal Terminal in Queensland, Australia eased to 21 today, down from highs of above 50 in December. Expectations of increased spot supplies have forced some trading firms to exit their positions and sell off their cargoes at progressively lower levels.

Argus last assessed premium hard low-volatile coking coal delivered into north China at $196.70/t cfr China, down from $207.85/t cfr one month ago.