Australian coking coal prices unchanged amid trading halt in China

Australian hard coking coal prices have remained mostly stable since last week, despite halted trading activities in the Chinese spot market.

Until this week, however, seaborne coking coal prices have undergone a continuous rally throughout the month of September, primarily supported by aggressive buying in China ahead of the eight-day Golden Week break, beginning today.

Average spot prices for the premium low-volatile (PLV) hard coking coal (HCC) grade surged by almost 30% during last month, on strong demand for higher-grade coking coals in China.

Many Chinese end-users have been taking early positions for securing December-January laycan cargoes in the light of escalating trade tensions between China and Australia, which could potentially worsen the demand scenario for seaborne coking coal.

Concerns have also emerged regarding the possibilities of stricter environmental checks and de-capacity measures in China for the winter season, which could tighten domestic availability of coking coal and in turn, lead to increased restocking demand for seaborne materials.

Near-term Outlook

The resumption of Chinese buying activity after the week-long break would depend on the easing of customs clearances, as the narrowing arbitrage between domestic-seaborne material could reduce buying interest for imported coking coal cargoes, considering the demurrage costs involved for the latter.

The domestic price for the PLV grade of hard coking coal in China is pegged at around $116.50/t (RMB 791/t), as against the corresponding seaborne price of $148.50/t (RMB 1,008/t) — implying a spread of $32/t (RMB 217/t).

Ex-China trading activities are also expected to be constrained as Indian buyers largely prefer waiting to assess market conditions after the Chinese holidays.

Meanwhile, certain Australian producers are withholding offers for November-loading cargoes, creating ambiguity about near-term price outlook.

Additionally, weather-related uncertainties in Australia – especially with the high probability of cyclone La Nina – might bear impact on coking coal shipments.

Price Assessments

Coking Coal

Latest offers for the Premium HCC grade are assessed at around $139.00/t FOB Australia, while offers for the 64 Mid Vol HCC grade are assessed at around $114.65/t FOB Australia.

For Indian buyers, these offers amount to $151.65/t and $127.30/t respectively on CNF India basis.

Pulverized Coal Injection (PCI) & Semi Soft Coking Coal

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

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By Aditya Sinha