Australian Coking Coal: Prices Struggle with Limited Spot Liquidity amid Steel Output Curbs

Australian premium low-volatile hard coking coal prices have continued on a declining trajectory in the last one month period, as Asia’s major export markets saw muted buying interest amid coronavirus-induced production cuts by multiple steelmakers outside of China.

Following the rapid outbreak of the novel corona virus disease (COVID-19) since end-January, there has been an inevitable decline in demand for steelmaking raw materials, as a majority of global steel industry giants started declaring force majeure on raw material procurement.

Going ahead into the second quarter (April-June) period of this year, the seaborne metallurgical coal market is faced with a bearish demand outlook amid concerns of potential growing oversupply caused by weak demand. This is because Australian coal mines are still planning to remain largely operational, despite the idling of blast furnaces across the globe as part of measures to tackle the ongoing spread of the deadly corona virus pandemic.

In India, Australia’s largest coking coal importer, spot demand for seaborne coking coal remains subdued, as the country’s government has enforced a total lockdown over its population of 1.3 billion people for 21 days starting Tuesday March 24 as a preventative measure against corona virus.

As a result, the country’s biggest coking coal importing companies – SAIL, RINL, Tata Steel, JSW Steel, JSPL – have reportedly refrained from signing new import contracts, influenced by expectations of production disruptions due to labor shortages and logistical issues caused by the 21-day lockdown.

Further, these companies are heard to have been urging their overseas coal suppliers to delay the delivery of existing contracts.

PRICE ASSESSMENTS

Latest offers for the Premium HCC grade are assessed at around USD 134.00/MT FOB Australia, while offers for the 64 Mid Vol HCC grade are assessed at around USD 119.70/MT FOB Australia.

For Indian buyers, the above offers amount to USD 143.90/MT and USD 129.60/MT respectively on CNF India basis.

Pulverized Coal Injection (PCI) & Semi Soft Coking Coal

N.B.: All prices are in USD/MT