MARKET TREND
All of a sudden, Coking Coal prices in Australia, the prime international market, have started slumping, which could be attributed to supply exceeding the demand. In response to the over-supply, the coal sellers in Australia have lowered their spot prices aimed at attracting buyers.
To what extent the prices will fall is however an object of consideration. Although there is currently not much demand in the market for the coal, the trend is not likely to continue for long as full-fledged steel production in China will resume from tomorrow (15Mar’18). Chinese steel makers were learnt to currently possess high stocks of the coal inventories, but these will start dwindling after the active steel production setting in. On 15Mar’18, the steel production cap, which was mandated by the Chinese Government during winter, will come to an end, paving the way for the steel makers there to ramp up their productions.
China is the largest Coking Coal consuming market, and that is due to that country being the largest steel producing nation globally. According to the data published by the World Steel Association, China has a massive steel production capacity, at 831.7 MnTPA, by the end of 2017; and the capacity is far ahead of the capacities of Japan and India at 104.7 MnTPA and 101.4 MnTPA respectively.
While the Coking Coal buyers cheering over the price fall, the prospect of encountering supply disruption due the imminence of a cyclone over the Queensland region of Australia is also looming large.
In the meantime, market sentiments in China have turned bullish due to the prospect of steel production there getting higher in the near future. In the Dalian Commodity Exchange, Coking Coal futures today rose by 2.7% day-on-day to Yuan 1,294.50/MT. Moreover, the construction segment in China is soon going to gain momentum, to trigger higher steel demand.
PRICE TREND
The latest export offers for the Premium HCC were reported at around USD 215.50/MT FoB Australia, which was down by around USD 17.25/MT over the week-ago offers. Likewise, the recent offers for the 64 Mid Vol HCC were reported lower by around USD 3.4/MT against the offers in the week last. The fresh export offers for the 64 Mid Vol HCC were reported at around USD 197.50/MT FoB Australia.
Source: CoalMint Research
On CFR India basis, these offers translate into: USD 229.70/MT and USD 211.70/MT respectively.
In the meantime, a Canadian Coking Coal offer was heard at around USD 190.50/MT FoB.
The buying appetite among the Indian steel makers was learnt to be quite strong, and they were without high inventories at hand.
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