- Met coal markets stabilise after the rally, with buying slowing
- High freight and weak steel margins keep buyers cautious
The global metallurgical raw materials market has moved into a consolidation phase following the strong rally earlier this year, with prices across premium hard coking coal, PCI, semi-soft coal and coke remaining relatively firm even as buying activity slows.
Steelmakers are increasingly reassessing raw material costs against freight rates and narrowing steel margins, leading to more cautious procurement.
Premium Australian coking coal continues to anchor the market, while Atlantic supply from the United States provides an alternative source, though elevated freight costs and subdued demand are limiting aggressive purchasing.
Seaborne metallurgical coal prices
Premium Australian coal continues to set market direction
Premium low-vol hard coking coal from Australia remains the benchmark for the seaborne market and is currently trading around $219-221/t FOB Australia, indicating that the market has found short-term equilibrium rather than experiencing a sharp correction. Lower grade coals remain softer but are still supported by steady steel production across Asia.
Meanwhile, coking coal from the US continues to provide an alternative supply option for buyers seeking diversification away from Australian supply.
Low-vol hard coking coal from the US East Coast is currently around $195/t FOB, while high-vol A and high-vol B coals trade at lower levels and remain attractive for steelmakers blending coal to control costs. These Atlantic cargoes become particularly competitive when freight costs from Australia rise or when buyers seek supply security.
PCI market remains stable
Prices of coal meant for pulverised coal injection (PCI) in the seaborne market remain differentiated by origin and grade, even as demand has remained relatively stable compared with coking coal markets. Steelmakers continue to use PCI to reduce blast furnace costs by substituting a portion of expensive coking coal.
Australian PCI prices are currently around $150-153/t FOB, while Russian PCI delivered to India remains competitive depending on cargo position and quality. Demand tends to remain steady even when coking coal purchasing slows, as PCI helps mills optimise raw material costs.
Metallurgical coke prices
The metallurgical coke market has also seen steady activity, particularly from Indonesian and Chinese suppliers. Recent Indonesian cargoes priced around $245-246/t FOB highlight continued demand from Indian buyers.
Chinese coke prices remain lower on an FOB basis but increase significantly once freight is added for delivery into India. Because coke production costs depend heavily on coking coal prices, movements in coal markets typically feed through into coke prices with some delay.
Freight costs and steel margins shape buyer behaviour
Freight costs and steel margins are currently shaping buyer behaviour across the metallurgical raw materials market. Shipping rates from Australia to India remain elevated, keeping delivered coal costs high for Indian buyers, and prompting many steelmakers to hold back on large purchases while they wait for clearer price direction.
At the same time, steel production across Asia remains steady, but margins for many mills have tightened, typically leading to more cautious procurement or a shift toward lower-cost coal blends to protect profitability.
On the supply side, availability has improved as Australian exports recover from earlier weather disruptions, lifting cargo availability in the seaborne market and helping to stabilise prices.
At the same time, near-term demand continues to be shaped in part by trader activity, particularly in China and Southeast Asia, where some buying reflects positioning for resale rather than immediate end-use consumption.
Outlook
Looking ahead, the metallurgical raw materials market is expected to remain broadly balanced, with premium Australian coking coal prices likely to hold in the $210-225/t FOB range unless fresh supply disruptions emerge.
Weather-related risks in Australia or a pickup in steel demand could still push prices higher, while ongoing Middle East tensions are indirectly keeping freight costs elevated through higher oil prices, war-risk premiums and shipping disruptions.
For India, freight costs will remain the key swing factor. A decline in shipping rates could draw steelmakers back into the market more aggressively, tightening seaborne supply, while any escalation in Middle East tensions could push freight costs higher and lift delivered coal prices even if FOB levels remain stable.
Overall, the market appears to be entering a consolidation phase, with prices holding firm as participants wait for clearer signals from steel demand, freight and geopolitical developments.
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