Improvement in Coking Prices Aiding Companies to Re-establish Coal Production in Australia

Australian hard coking coal spot prices have made a strong recovery on the back of resurgent demand originating from steelmakers and industrial consumers based in the two main growth engines in Asia—China and India.

With construction activity in China in full swing leading to firm steel consumption, the country’s demand for steelmaking raw materials, iron ore and coking coal, is forecast to remain upbeat in the coming months until the summer season.

Notably, Chinese mills produced 2.56 MnT of crude steel a day on average in Apr’18, the highest in four years, as per latest government data.

Accordingly, China’s expanding steel output coupled with declining domestic coal production have raised the country’s imports of coking coal to a significant extent — up 38% M-o-M to 4.02 MnT in Mar’18 from 2.91 MnT in Feb’18, according to customs data released on 24 Apr’18.

Overall coal imports by China from Australia surged 28% M-o-M from 5.88 MnT in Mar’18 to 7.57 MnT in Apr’18.

Further, Australian metallurgical coal imports by India are increasing by around 3.5% per quarter, according to industry analysts.

Consequently, several Australian companies are planning to leverage on the increase in the country’s metallurgical coal exports to the Asia-Pacific markets, and are rethinking projects considered unviable just a couple of years ago.

Bowen Coking Coal Ltd. (ASX: BCB) is one such coking coal exploration company with a portfolio of advanced exploration assets, including the Comet Ridge, Cooroorah and Hillalong coking coal projects – all located in the world renowned Bowen basin in Queensland, Australia.

It is worth mentioning that the Bowen basin is by far the world’s largest metallurgical coal producing region.

Bowen Coking Coal is aggressively progressing its coking coal assets in Queensland’s Bowen Basin to meet the avaricious demand from the global steel industry.

The company recently launched a two-year exploration and development program, commencing with the maiden drill program at its flagship Cooroorah Project.

Moreover, its latest portfolio addition occurred just last week with the acquisition of the Hillalong East coking coal project from Rio Tinto Exploration and Cape Coal.