Australian coking coal prices continued to rise amid tight supply. On 24 Jan’22 Australian premium HCC FOB prices were at $444.50/tonne (t) , up by $25/t w-o-w.
Demand for Australian coking coal is high because of restocking needs from end-users across ex-China markets. This price rise is supported not only by demand but also due to supply constraints.
Limited availability of spot premium hard coking coal from major miners amid Covid restrictions and subsequent labour issues, coupled with more than average rainfall, is driving up the prices.
Amid the supply issues, Australian miners are heard to be revising their production targets for FY’22 ending 30 Jun’22. BHP Billiton last week lowered its FY’22 (Jul’21-Jun’22) production guidance for coking coal to 38-41 million tonnes (mnt) from 39-44 mnt. Another miner, South32, reported production cuts for the December quarter, down 15% y –o-y and 24% lower q-o-q.
US coking coal prices up $10/t w-o-w
On 24 Jan’22, high-vol HCC coking coal from USA was at $400/t, up by $10/t w-o-w. Although the prices have risen weekly, the increase is not in tandem with the rise in Australian coking coal prices. This is becausedemand from China, its biggest coking coal export destination, has stabilised ahead of the winter holidays starting 31 Jan’22. And, also because the Curtis Bay coal terminal, which had closed last month due to an explosion, has reopened.
Indian buyers scout for coking coal cargoes
Indian steel players have very limited coking coal inventory left with them which is expected to last till mid-February. As very limited spot cargoes are available in the market, Indian steel producers would have to reduce their utilisation levels. They would have to ultimately pass on the increased raw material costs to end-consumers.
Outlook
In the near term, while US coking coal prices would see some stability over the next week to 10 days ahead of the Chinese Lunar New Year holidays, Australian coking coal prices would be supported amid demand from the ex-China markets.
In the mid term, coking coal prices are expected to remain elevated till Mar’22 amid supply issues.
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