Australian Coking Coal: Prices recover modestly despite China’s import curbs

Australian premium low-volatile (PLV) hard coking coal (HCC) prices have staged a modest recovery over the past month, on the back of renewed bookings concluded at higher levels amid sustained buying interest in China.

CoalMint assessed the FOB Australia price for PLV HCC up by $2.17 per tonne (t) month on month, and HCC 64 Mid Vol up by $2.85/t over the same period.

Chinese demand constrained by stringent import restrictions

The Chinese steel market has made a quick recovery after the 76-day lockdown following the Covid-19 viral outbreak. Steel inventories are gradually exhausting with normalised production rates and steelmakers are earning margins, leading to a resurgence in demand for metallurgical coke, and in turn for coking coal.

But many buyers have been reluctant to procure seaborne cargoes in light of stringent port-clearance policies in China. Several buyers were heard to consider the higher cost incurred for procuring seaborne coals due to longer waiting time at the ports.

Most market participants are uncertain as to whether the import restrictions for coking coal would tighten further and are finding customs clearance procedures time- and money- consuming.

Buying interests from Chinese end-users have also been constrained by limited import quotas, which may possibly hinder the revival of demand for seaborne coking coal.

However, healthy steel sales and production levels suggest that China-delivered prices for seaborne coking coal are well expected to remain at current levels for a while, but if steel mill profits continue to be relatively low, the current price levels of coking coal cannot be supported.

PRICE ASSESSMENTS

Coking Coal

Latest offers for the Premium HCC grade are assessed at around $116.00/t FOB Australia, while offers for the 64 Mid Vol HCC grade are assessed at around $93.85/t FOB Australia.

For Indian buyers, these offers amount to $128.10/t and $105.95/t respectively on CNF India basis.

Pulverized Coal Injection (PCI) & Semi Soft Coking Coal

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

By Aditya Sinha