Australian coking coal prices have continued to climb throughout this month, as multiple trade deals were concluded and higher bids emerged in the Chinese spot market.
Average spot prices for the premium low-volatile (PLV) hard coking coal (HCC) grade surged by as much as 30% month-on-month, on firm buying interest for higher-grade coking coals in China.
This sudden rally in seaborne coking coal prices is primarily attributable to the aggressive spot buying observed in China ahead of the upcoming eight-day break, beginning 1 October.
The relative price advantage of seaborne coking coal, compared against Chinese domestic material, has been favoring buying sentiments among Chinese end-users with available import quotas. However, some Chinese end-users have chosen to hold back on coking coal procurement until after the National Day holidays.
There is still room for further increases heading into the fourth quarter, amid renewed hopes of a possible easing of import controls at Chinese ports, coupled with the likely post-monsoon recovery in Indian demand.
Indian Market Scenario
Indian end-users’ spot demand for imported coking coal has largely remained moderate for the past few months, though steel mills have quickly ramped up capacity utilization rates following the gradual lifting of lockdown measures.
This is partly because most Indian end-users only buy small volumes of seaborne coking coal in the spot market, with the country’s largest steel manufacturers procuring their coking coal supplies through fixed-price long-term contracts.
Notably, India’s overall steel demand is expected to contract by 18% in 2020 – from over 100 mn t consumed during 2019 – due to the Covid-19 crisis, as per Worldsteel. This could in turn affect coking coal demand in the fourth quarter.
Nevertheless, Indian steel prices are relatively stable at this point in time, and steel mills’ profit margins are satisfactory, both of which encourage optimum steel production and thereby necessitate restocking demand for coking coal.
Near-term Outlook
Coking coal prices are well anticipated to recover significantly by the year-end; supported by the end of the monsoon season in Asia and subsequent revival in construction activity in the region.
On the supply side, uncertain weather conditions in Australia – especially with the high probability of cyclone La Nina – may bear impact on coking coal shipments.
India Coal Import Shipment Vessel Lineup
CoalMint’s latest vessel lineup data (as on 23 Sep’20) reveals that a total quantity of 1.14 mn t of Australian coking coal is expected to reach India until 6 Oct’20.
The following table presents a detailed breakup of these shipments.
| Unload Port | Vessel Name | Quantity (t) | ETA | Load Port |
| Vizag | Krousson | 42,000 | 23-Sep-20 | Hay Point |
| Haldia | Seacon Shanghai | 30,000 | 24-Sep-20 | Hay Point |
| Haldia | Zheng Yao | 30,000 | 24-Sep-20 | Gladstone |
| Jaigarh | Charlotte Oldendorff | 89,850 | 25-Sep-20 | Gladstone |
| Paradip | Nadeshiko | 41,500 | 25-Sep-20 | Hay Point |
| Dhamra | Seabiscuit | 49,000 | 25-Sep-20 | Hay Point |
| Haldia | Shandong Fu Yuan | 30,000 | 25-Sep-20 | Abbot Point |
| Haldia | Cemtex Innovation | 30,000 | 26-Sep-20 | Hay Point |
| Vizag | Sara | 32,653 | 26-Sep-20 | Hay Point |
| Haldia | Shandong Fu Xin | 29,941 | 26-Sep-20 | Hay Point |
| Paradip | Ap Astarea | 45,000 | 27-Sep-20 | Gladstone |
| Haldia | Haoyue | 28,000 | 27-Sep-20 | Hay Point |
| Krishnapatnam | Key Light | 47,691 | 27-Sep-20 | Gladstone |
| Mormugao | Leading Bravery | 87,000 | 27-Sep-20 | Gladstone |
| Vizag | Tong Xiang | 45,000 | 27-Sep-20 | Newcastle |
| Vizag | Vishva Vijay | 40,000 | 27-Sep-20 | Hay Point |
| Jaigarh | Double Pride | 80,000 | 28-Sep-20 | Hay Point |
| Haldia | Key Light | 20,990 | 1-Oct-20 | Gladstone |
| Haldia | Key Light | 11,882 | 1-Oct-20 | Gladstone |
| Dhamra | Bw Nara | 45,000 | 4-Oct-20 | Port Kembla |
| Dhamra | Frontier Wave | 158,000 | 5-Oct-20 | Gladstone |
| Dhamra | Yutai Ambitions | 47,000 | 5-Oct-20 | Hay Point |
| Vizag | Kastor | 76,000 | 6-Oct-20 | Hay Point |
Price Assessments
Coking Coal
Latest offers for the Premium HCC grade are assessed at around $139.00/t FOB Australia, while offers for the 64 Mid Vol HCC grade are assessed at around $114.40/t FOB Australia.
For Indian buyers, these offers amount to $151.90/t and $127.30/t respectively on CNF India basis.
Pulverized Coal Injection (PCI) & Semi Soft Coking Coal
| FOB Australia | CNF China | CNF India | |
| Low Vol PCI | 81.90 | 93.50 | 94.80 |
| Mid Tier PCI | 78.90 | 90.50 | 91.80 |
| Semi Soft | 70.40 | 82.00 | 83.30 |
Note: All prices are in US Dollar per tonne ($/t).
Abbreviations:
t = tonne
mn t = million tonnes
ETA = Estimated time of arrival
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By Aditya Sinha
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