US-origin hard coking coal (HCC) prices have increased marginally across all three grades during the current week, on limited supply availability coupled with support from Australian premium low-vol HCC prices.
Despite potential for higher restocking demand, buyers are yet to become more active for US spot cargo, with many mills managing contract volumes, trials and earlier tender purchases. Spot-orientated mills may be returning to the market to ensure supplies for the fourth quarter.
European Market Scenario—
The European demand for US coking coal had already been weakening since last year itself, as most steel mills reduced their output levels to cope against lower profit margins. The crisis has also highlighted the region’s overcapacity problem, raising the possibility of extensive merger and divestment plans.
Competitively-priced Australian high-CSR* coals offered into a lackluster European market has further aggravated the plight of coking coal exporters from the US.
Amid the further collapse in steel demand brought about by the ongoing coronavirus crisis – around 19 mn t of steelmaking capacity was withdrawn in Europe during the market slump caused between mid-March and May this year.
Meanwhile, European steelmakers have largely resumed production since mid-May and experts opine that steel demand in Europe is improving marginally.
Near-term Outlook—
American coal miners are still cautiously optimistic that increased consolidation across the European Union and mine closures within the United States would tighten the availability of coking coal supplies into the EU market.
Furthermore, expectations are rife that the seaborne coking coal market might soon see demand recover sufficiently from India and Northeast Asian contract buyers, limiting availability for spot sales and driving up prices.
PRICE ASSESSMENTS
The latest FOB US East Coast price of low-volatile hard coking coal is assessed at $103.50/t, based on 58% coke strength after reaction (CSR), 8% ash, 0.8% sulfur and 19% volatile matter material.
For Indian buyers, the above price amounts to $132.50/t on CNF India basis, after considering a USEC-India dry bulk freight rate of $29.00/t for delivery from the Port of Hampton Roads by Panamax vessel class.
The US high-volatile type A (HVA) coking coal price is assessed at around $107.00/t FOB USEC, based on 7% ash, 0.85% sulfur and 32% volatile matter.
The US high-volatile type B (HVB) coking coal price is assessed at around $99.00/t FOB USEC, based on 8% ash, 0.95% sulfur and 34% volatile matter.
* Coke Strength after Reaction (CSR)
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By Aditya Sinha
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