Seaborne premium hard coking coal prices have remained relatively stable over the past week as trading activity in the metallurgical coal commodity markets was paused this week with most buyers waiting for clarity on the logistical constraints of Australian supply.
Throwing light on the issue, S&P Global Platts has recently reported that Australian rail freight operator Aurizon would be recommencing railroad services on the Goonyella transit line in central Queensland.
In this context, it is worth mentioning that Queensland is one of the largest seaborne exporters of coal in the world and has a rich endowment of approximately 8.7 billion metric tons (raw in-situ) of coking coal.
Hence, the ongoing supply disruption of Australian met coal might be highly anticipated to ease out, expectedly leading to a correction of its sky-high import prices in the global markets.
Reportedly, Aurizon has agreed to halt the implementation of all new operating practices that it planned on the Central Queensland Coal Network (CQCN), for a period of 10 weeks, providing much-needed relief for the State’s metallurgical coalminers.
Notably, Aurizon Network, a subsidiary of Aurizon Holdings Limited, monopolistically manages Australia’s largest export coal rail network, the CQCN.
The company would immediately resume its normal maintenance programme on the rail network being driven by the Queensland Competition Authority’s (QCA) earlier draft decision which advised the train operator to curtail on its maintenance expenditure.
The QCA’s latest draft ruling, released in Dec’17, allows Aurizon to earn only USD 3.89 billion from its infrastructure providing business between Jul’17 and Jun’21, which Aurizon claims is USD 999 million less than what it should be.
In Mar’18, Aurizon responded by announcing plans to change its rail maintenance practices, which threatened a reduction of up to 20 million metric tons (MMT) of coal throughput each year.
It is to be hoped that Aurizon’s aforesaid declaration to co-operate with the QCA, over the latter’s draft ruling, would ultimately end their prolonged standoff, which has been resulting into extremely tight supply and significantly risking the state’s coal exports.
The latest import offers for the Premium Low-Vol HCC grade are assessed at around USD 201/MT FOB Australia, a dollar higher than last week’s rate.
On the other hand, offers for the 64 Mid-Vol HCC have gone up by USD 6.10/MT to around USD 187.20/MT FOB Australia.
Source: CoalMint Research
For Indian buyers, the above offers amount to USD 215.70/MT and USD 201.90/MT respectively on CFR India basis.
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