That the commodity market is ruled by the action of demand and supply is proved once again.
The falling Coking Coal prices, which were speculated to breach the USD 200/MT mark, have reversed the path, rising again.
The underlying driver for the latest price rise for the coal is the resumption of purchases in China. Steel makers in that country have resumed purchases of the coal to stock ahead of the Chinese Lunar Year holidays in mid-Feb’18. At the same time, the importing appetite of the Indian steel makers also has strengthened recently. Australian Coking Coal sellers took advantage of these factors and raised their export offers.
In the Chinese domestic markets, there was however no rise in the coal prices. According to the market inputs received, Coking Coal was sold in the domestic markets of that country at around Yuan 1,325/MT.
Offers for the Premium HCC have gone up to around USD 217.50/MT FoB Australia, up by around USD 7/MT over the offers assessed in the last week. However, offers for the 64 Mid Vol HCC have undergone no major change over the offers in the last week. These offers have hovered at around USD 179.85/MT FoB Australia.
Source: CoalMint Research
On CFR India basis, these offers translate into: USD 230.80/MT and USD 193.15/MT respectively.
In the Union Budget for FY19, there is a prospect of nullifying the existing 2.5% import duty on Coking Coal. In that case, the cost pressure on Indian steel makers in procuring Coking Coal from foreign markets will somewhat be eased.
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