Australian Coking Coal Prices Continuing to Soften as Chinese Demand Falters

Australia’s premium low-volatile hard coking coal prices have been on a consistent downward trajectory since the latter part of last month, in response to falling demand for seaborne materials from its key international markets, viz. China and India.

Prices in the mid-volatile hard coking coal segment have also come under pressure lately – after having held steady in the past couple of weeks – as buyers retreated from the market.

In China, sellers expect trading activities to remain thin in the near term on sufficient supply of coking coals in the market, coupled with low restocking needs among end-users.

Chinese interest in Australian coal imports has been indefatigably dampened by a prolonged persistence of uncertainties around restrictions imposed on seaborne cargoes arriving from Australia, in addition to an unofficial ban on Australian coal vessels berthing at different Chinese ports.

China’s currency devaluation inflating procurement cost for imported coal

The Chinese Yuan has dropped to a more than four-month low against the US dollar, following an impasse in US-China trade negotiations— the currency depreciated below 6.9 to the US dollar this week, touching its lowest level since late December.

China’s currency devaluation increases cost of procuring imported coking coal and in turn, the production cost of steel manufacturing.

On the other hand, the weaker currency will hurt profitability of traders selling seaborne coking coal at Chinese ports.

Elsewhere in the Indian market, spot demand for July-August-loading cargoes of imported coking coal has now moderated, due to the approaching monsoon season.

PRICE ASSESSMENTS

Latest offers for the Premium HCC grade are assessed at around USD 198.50/MT FOB Australia, lower by USD 2.50/MT than the average rate of USD 201/MT that prevailed in the week gone by (3-7 Jun’19).

Offers for the 64 Mid Vol HCC grade are assessed at around USD 181.85/MT FOB Australia.

For Indian buyers, the above offers amount to USD 211.50/MT and USD 194.85/MT respectively on CNF India basis.