Australian Coking Coal: Prices bounce back on active FOB trading and renewed Chinese demand

Australian coking coal prices have recovered swiftly in September so far, after the steep decline since March and then eventually hitting rock bottom last month.

Average spot prices for premium low-volatile (PLV) as well as medium-volatile (PMV) hard coking coal (HCC) surged by $9-11/t during this week, with positive demand outlook in both China and India.

Three Panamax vessels of PMV HCC, with October-November laycans, were traded at $125-128/t CNF China on Tuesday September 15.

An FOB Australia booking concluded on Wednesday September 16, at $100.50/t for a 40,000 t cargo of HCC with October laycan, is among the latest to have been reported.

Chinese Market Scenario

In China, despite scarce offers and physical trades, buying interests for seaborne coking coal seem to have changed considerably as of late, on account of favorable price arbitrage relative to domestic material.

Secondly, the ongoing rally of seaborne coking coal prices in the FOB market is supported by Chinese steel mills buying materials in preparation for the upcoming Golden Week holidays on October 1-7.

China-delivered spot prices, for Australia-originated coking coal, also witnessed sharp increases over the past two weeks, which was driven primarily by the conclusion of a much-awaited PLV sell tender last week for 85,000 t with early-October laycan.

Some Chinese end-users, however, continue to stay on the sidelines as import quota limitations and customs-related hassles still remain in place.

Indian Market Scenario

Indian end-users’ demand for imported coking coal is gradually making a comeback, which would lend further support to offer prices in the FOB market.

India-based coal trading firms are hopeful that seaborne coking coal demand would soon pick up on restocking needs, as most steel mills have resumed normalized operations and the monsoon season should end as early as next month.

Most Indian end-users, however, only buy small volumes of seaborne coking coal in the spot market as the country’s largest steel manufacturers procure their coking coal through fixed-price long-term contracts.

India Coal Import Shipment Vessel Lineup

CoalMint’s latest vessel lineup data (as on 16 Sep’20) reveals that a total quantity of 1.25 mn t of Australian coking coal is expected to reach India this month.

The following table presents a detailed breakup of these shipments.

Price Assessments

Coking Coal

Latest offers for the Premium HCC grade are assessed at around $128.50/t FOB Australia, while offers for the 64 Mid Vol HCC grade are assessed at around $105.05/t FOB Australia.

For Indian buyers, these offers amount to $141.25/t and $117.80/t respectively on CNF India basis.

Pulverized Coal Injection (PCI) & Semi Soft Coking Coal

Note: All prices are in US Dollar per tonne ($/t).

Abbreviations:

t = tonne

mn t = million tonnes

ETA = Estimated time of arrival

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By Aditya Sinha