Coking Coal Offers Drift Marginally Down on Uncertainty

Coking Coal spot prices in Australia have drifted downwards marginally as steel makers in China considered halting imports for the time being due to the uncertainties appearing on the horizon.

There was a rumor of the Chinese government to lower steel production capacity in the near future for curbing atmospheric pollution. This has turned the sentiments of the steel makers there bearish, and thus they have reduced imports of the coal.

Offers for the Premium HCC have drifted downwards by around USD 2.25/MT to around USD 206.50/MT FoB Australia against the week-ago offers. In similar lines, offers for the 64 Mid Vol HCC also have come down by around USD 4/MT to around USD 175/MT FoB Australia.

There offers translate into: USD 221.75/MT and USD 190.25/MT respectively on CFR India basis for Indian buyers.

Although high Coking Coal prices in the key international region is taking a toll on the steel makers in India, there is a reason for them to at least raise their enthusiasm.

State-owned—Coal India Limited (CIL)—is learnt to be getting closer to acquiring a substantial stake in an Australian Coking Coal mining company. According to the informational received, CIL is now in the advanced stages of talks with a Queensland-based mining company for acquiring the stake, for which CIL will have to commit purchase of a minimum quantity every year, according to the prospective terms and conditions.

If the deal takes effect, CIL will be able to supplement the growing consumption of the coal in the country, in which domestic production is inadequate to cater to the demand. As such, around 85% of the demand for the coal has to be imported.

Consumption of Coking Coal is expected to rise to 161 MnT by FY31, when production of steel will rise to 300 MnT, according to the National Steel Policy 2017.

IMPORTS

Coking Coal imports have continued to enter into India due to the active steel making going on in the country. During the 1-18Sep’17 period, around 2.5 MnT of the coal was imported in the country, data compiled by CoalMint Research shows.