Surprises spring up every now and then in the commodity market and short term speculations thus often end in disappointment.
The latest case in point is the Coking Coal market. Up until recently, the buyers of the coal were relishing themselves, finding themselves in a comfort zone on account of the falling Coking Coal prices. They postponed their purchases, and had waited for the prices to decline to significant levels.
But, to utter surprise, the news of the Dalrymple Bay Coal Terminal (DBCT) declaring force majeure on Coking Coal loadings started doing the rounds. According to the inputs received, DBCT has declared the force majeure due to the occurrence of the tropical cyclone, Iris. Before declaration of the force majeure, there were at least 20 vessels in queue at the DBCT.
According to the status update by the Bureau of Meteorology of Australia, the cyclone is likely to weaken soon, and by Thursday, the intensity of the cyclone is expected to weaken below tropical cyclone levels.
So, the bottom line is, prices of the coal are expected to reverse the falling trend after the cyclone recedes and the port terminal resuming operations. The cyclone is likely to cause damages to the rail and port infrastructure. At the same time, coal at the stockpiles is expected to be impacted by the heavy rains by raising the moisture content.
Coking Coal prices were undergoing a free falling in the presence of weak demand and amply supply. However, the trend reversed with the cyclone making its presence felt.
The latest offer for the Premium HCC was assessed at around USD 197.50/MT FoB Australia, which was up by around USD 1/MT over the offer assessed on 2Apr’18 at around USD 196.50/MT FoB Australia. In comparison with the offer assessed seven days ago, the latest offer is at around almost at the same level, without undergoing significant change.
The recent offer for the 64 Mid Vol HCC did not undergo any tangible change from that on 2Apr’18. The latest offer was assessed at around USD 179.35/MT FoB Australia, lower by around USD 12.85/MT in comparison with the offer before the last seven days.
Source: CoalMint Research
On CFR India basis, the latest offers translate into: USD 211.25/MT and USD 193.10/MT respectively.
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