Coking Coal Prices to Come Down as Supply Gradually Returning to Normalcy

The first sign of an imminent fall in Coking Coal prices is already showing.

Spot prices of the Premium HCC have drifted down by USD 15/MT as supplies are improving due to the resumption of most rail lines, connecting coal mines to ports.

PRICES TO COME DOWN

Gradual improvement in supplies has resulted in Coking Coal prices drifting downwards. According to the latest inputs received, spot price of the Premium HCC has gone down by USD 15/MT to USD 285/MT FoB Australia from the price assessed last week.

However, the spot price of the 64 Mid Vol HCC has remained at around the price assessed the last week. The recent spot price of the 64 Mid Vol HCC is at USD 247.50/MT FoB Australia.

Source: CoalMint Research

For Indian buyers, these offers translate into: USD 297.60/MT and USD 260.10/MT respectively on CFR India basis.

INDIAN STEEL COMPANIES LIKELY TO RAMP UP R&D EXPENDITURE

In view of the frequent Coking Coal supply disruption in Australia, Indian steel companies are likely to increase their research and development expenditure for upgrading their production machineries to enable usage of a wide variety of coal types for coking purposes—CoalMint gathered from market sources.

The possible increase in research and development will be aimed at reducing dependence mostly on Australia and increase the import country spectrum to: USA, Canada, Russia and Mongolia.

MOST RAIL SYSTEMS RESUME OPERATIONS

Aurizon, a major operator of rail systems handling coal transportation in the Queensland region of Australia, has recently announced that three of its coal systems, which make up the Central Queensland Coal Network, already resumed operations, albeit with reduced capacity and restricted conditions.

Its Blackwater coal system, which connects the port of Gladstone, re-opened on 10Apr’17. The Moura coal system, which connects the Gladstone port, resumed operations on 12Apr’17. The Newlands coal system, which connects the Abbot terminal, restarted on 13Apr’17.

In an unexpected development, the Goonyella coal system, which sustained severe damages and was expected to take five weeks for the repair, will be re-opened earlier by one and half weeks, on 26Apr’17. The Goonyella system, which connects Hay Point Coal Terminal and Dalrymple Bay Coal Terminal, will initially operate with reduced capacity and low speed conditions.

Source: CoalMint Research 

IMPORTS

Interestingly, a significant volume of around 2.7 MnT of Coking Coal had landed at Indian ports during the 1-17Apr’17 period, according to data compiled by CoalMint Research. The import consignments pertained to vessels loaded with coal, which was stocked at ports prior to the occurrence of the cyclone.