Supply disruptions seem not to leave the Australian Coking Coal market. The disruptions in the coal supply that occur every now and then in Australia trigger upswings in prices of Coking Coal, which of late has even prompted the importers to look at alternate markets for sourcing the coal, which is used in steel making.
The latest supply disruption has arisen from the force majeure declared by South32, the operator of the Illawarra Metallurgical Coal, which bears two Coking Coal underground mines– Appin and Dendrobium, after the regulator ordering the operator to halt production at the Appin mine due to higher levels of gas concentrations in the mine. The Dendrobium mine will continue to be in operation. South32’s Coking Coal production in the Illawarra Metallurgical Coal could be broken up into 60% production at the Appin mine; and the rest 40% production at the Dendrobium mine.
Although the exact timeline for the force majeure to be in place is not clear, market participants speculate it to last around two to three months.
Coking Coal offers from Australia, as a result of the force majeure, have gone up significantly. Prior to the force majeure, Coking Coal prices were in the rising mode due to the demand getting stronger on account of the resumption of imports by Chinese steel makers, who had procured to coal not only for the daily consumption but also for restocking. The force majeure has in fact compounded to the force behind the already rising prices of the coal.
The latest offer for the Premium HCC is reported higher by USD 11/MT, at USD 164/MT FoB Australia, than that reported in the last week. The recent offer for the 64 Mid Vol is also reported higher by USD 6.95/MT, at USD 144.70/MT FoB Australia, as compared with the week-ago offer.
Source: CoalMint Research
For Indian buyers, these offers translate into: USD 174.80/MT and USD 155.50/MT respectively on CFR India basis.
In India, there have already been concerns among the steel makers to broaden the spectrum of countries of Coking Coal imports due to the occasional supply disruptions in Australia. Steel makers in the country have recently zeroed upon the USA and Canada markets for sourcing the coal.
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