Australian coking coal prices gain on limited cargo availability

Australian premium hard coking coal prices continued to increase over the past week, on the back of persistent high demand in the Asian markets excluding China, while on-spot availability of premium cargoes remained tight.

However, Indian demand for seaborne coking coal remained largely subdued, as both steel demand and metallurgical coke prices are declining due to the onset of the monsoon season.

Meanwhile, ongoing safety checks and suspension of operations at various coal mines in China fuelled supply concerns.

Price assessments

• Premium low-volatile (PLV) hard coking coal (HCC) and 64 Mid Vol HCC grades are assessed at around $206.00/tonne (t) (+4.0% week-on-week) and $177.75/t (+3.9% w-o-w) FOB Hay Point, Australia.
• For Indian buyers, these prices amount to $233.25/t (+2.8% w-o-w) and $205.00/t (+2.6% w-o-w) respectively on CNF India basis.
• Australia-India dry bulk freight rate is currently assessed at $27.25/t (-5.5% w-o-w) for delivery by Panamax vessel class.

Trade deals

• A trade 75,000 t of Peak Downs branded Australian PLV HCC was concluded at $207/t FOB, with mid-Aug’21 laycan.
• A trade for 35,000 t of Saraji branded Australian PLV HCC was concluded at $200.00/t FOB on 5 Jul’21, with late-Aug’21 laycan.

Stock positions at major ports in India

Total coking coal stocks at major Indian ports at the end of last week had increased to 6 million tonnes (mn t), up by 2.61% w-o-w against 5.85 mn t in the previous week.

Presently, coking coal stocks at Paradip port are at 1.76 mn t, down by 3.84% w-o-w; while inventory at Dhamra port is at 1.49 mn t, up 13.92% w-o-w.

Major Indian ports include Gangavaram, Paradip, Mundra, Vizag, Dhamra, Krishnapatnam, Kandla, Haldia, Navlakhi, Magdalla, Hazira, Karaikal, Tuticorin, Dahej, Goa, Jamnagar, Mangalore, Bhavnagar, Kakinada, Muldwaraka and Pipavav.

Outlook

Australian coking coal export prices have gradually found support as increasing demand from Japan, South Korea and India consumed the oversupply following China’s import ban on Australian coals since mid-Oct’20.

Market participants anticipate Australian premium coking coal prices to stay firm on account of limited availability of prompt-loading cargoes for near-term deliveries.

However, Indian buyers are not expected to resume full-scale restocking in the near term despite the easing of lockdowns in several states, as end-users are well-stocked with sufficient inventory.

As a result, further upside support for Australian coking coal prices may be limited as major coking coal-consuming companies are avoiding spot exposures in India, the world’s second-biggest coking coal importer.