Australian coking coal prices descend on muted demand from China

Australian hard coking coal prices have slightly decreased during this week due to thin liquidity as the Chinese markets remained closed for the Golden Week holidays.

Additionally, emerging concerns about potential tightening of Chinese port restrictions, on coking coal imports from Australia, could reduce near-term demand for seaborne coking coal.

At present there are mixed opinions on the Chinese demand outlook after week-long holidays. While some expect import demand to stay firm as long as the domestic-seaborne price arbitrage stays favorable, others fear the possibility of tighter import rules to restrain import demand for coking coal.

But on the brighter side, possibilities of stricter environmental checks and de-capacity measures for the winter season could tighten domestic coking coal availability in China and lead to increased seaborne demand.

US coking coal prices ascend on stronger demand and limited supply

US coking coal prices have been gaining on the back of recent incremental sales activity, with additional volumes exported into Asia, although European steel trade and demand has not improved significantly.

Most of the US coking coal suppliers are struggling to meet the growing orders, as several coalmining companies had earlier reduced production and idled key high-grade mines such as Maple Eagle.

A surge in demand for US-originated coking coals is being heard for November-loading cargoes as Australian suppliers are withholding offers citing weather-related uncertainties. The high probability of cyclone La Nina, in particular, may severely disrupt outbound shipments from Australia.

Indian market awaits Chinese buyers’ return to reassess price expectations

Indian end-users’ spot demand for imported coking coal has largely remained moderate as of late. This is partly because most Indian market participants adopted a wait-and-see approach while China-based buyers were absent from the spot market.

Even as India’s overall steel demand is anticipated to decline, the country’s domestic steel production has risen back to pre-pandemic levels with large-scale integrated steelmakers having ramped up capacity utilization at all major blast furnaces.

Furthermore, Indian finished 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.

Price Assessments

Coking Coal

Latest offers for the Premium HCC grade are assessed at around $132.25/t FOB Australia, while offers for the 64 Mid Vol HCC grade are assessed at around $110.05/t FOB Australia.

For Indian buyers, these offers amount to $145.20/t and $123.00/t respectively on CNF India basis.

Pulverized Coal Injection (PCI) & Semi Soft Coking Coal

Note: All prices are in US Dollar per tonne ($/t).

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By Aditya Sinha