Australian thermal coal prices, that have been rallying since the begining of January, has seen a correction of $4-5/t against the highs of $62/t (FoB Newcastle) achieved around last week.
Despite Chinese ban on Australian coal, its prices received support in the first three weeks of January due to demand support from:
• Indian cement sector
• Vietnamese utilities
• European power units amid colder winters
• Supply tightness caused by thunderstorm in New South Wales
In addition to this, one of the reasons being cited for the drop in Australian coal price is the correction witnessed in South African and Indonesian coal over the past few days.
Increased demand from China for Indonesian and South African coal due to colder-than-usual winters in January made the thermal coal prices from both the countries to rally. However, with Chinese New Year approaching, buying inquiries from China dimmed and thermal coal prices of both the countries have undergone a correction.
In various trade deals heard, Australian 5500 NAR coal price is being assessed at $55-56/t, FoB Newcastle basis for February loading while Indian buyers are further bidding for $53/t, FoB basis. Trades for 6000 NAR Australian coal are being heard at $89-91/t, FoB basis.
The Indian cement buyers and power utilities (especially situated in portside) are preferring Australian coal over South African RB2 (5500 NAR) one as it is still cheaper by $10-11/t against the latter.
Outlook
As per the market participants, Australian coal is likely to remain stable and hover in the range of $55-56/t, FoB basis in the near future. The prices would see a significant downward pressure only if China removes the ban on Australian thermal coal which few industry sources believe is likely to happen soon.
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