Australian premium HCC FOB prices fell by $6/tonne (t) w-o-w to $439/tonne (t) on 8 Feb’22..
Why did prices fall?
Prices fell in tandem with the drop in demand for Australian coking coal in the spot market. Buyers from India and ex-China markets have retreated into a wait-and-watch mode, awaiting a clearer price direction.
Another reason for the fall in prices was the inflow of non-Australian coking coals from USA, Canada, Russia and Indonesia because China was absent from the market due to the New Year holidays.
Supply side
On the supply side, the limited availability of spot premium hard coking coal from Australia continues amid Covid restrictions and subsequent labour issues, coupled with more than average rainfall.
High rainfall is expected to continue for the rest of February as per meteorological predictions. Thus supply-side constraints will remain in the near term.
In India, the spot market saw limited trading activity with offers for Australian premium hard coking coal scarce due to the limited availability of spot cargoes.
An Indian trader said: “There is demand for coking coal in India but limited supply from Australia and comparatively higher prices are holding back buyers.”
US market low
On 8 Feb’22, high-vol HCC coking coal from USA was at $390/t, down by $10/t w-o-w.
US coking coal prices declined as limited demand was expected following a round of spot deals into Europe ahead of new contracts and with China yet to return to book spot cargoes.
Low demand in China
In China, domestic coking coal prices were mostly range-bound amid thin demand due to the Lunar New Year holidays.
However, stricter steel production curbs were announced for northern steel mills which are expected to last till 11 Feb’22, due to poor air quality. This will reduce buying interest in imported coking coal in China.
An end-user based in China said demand will slowly recover in March, as policies on production curbs are expected to be relaxed post-the Winter Olympics.
Outlook
The direction of the US coking coal market and prices will be determined by how demand behaves in China after the Winter Olympics. Australian coking coal prices will not see a significant change in the near term.
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