Stronger Demand Keeps Coking Coal Prices at Highs

MARKET TREND

Coking Coal prices in Australia—the key international market—have maintained the uptrend on the back of stronger demand and some supply disruptions.

Steel mills in China are now back to business after the Chinese Lunar Year holidays getting over. Interestingly, the steel production cap, mandated by the Chinese Government during the winter season, on environmental concerns, will come to an end on 15Mar’18.

The deck is now clear for full-fledged steel production to resume in China. And this has triggered aggressive purchases of Coking Coal among the steel makers there—resulting in the coal sellers in Australia seeing stronger demand, in response to which the sellers lifted the spot prices constantly.

At the same time, heavy rains in Australia also have been a factor behind the sellers tending to lift their coal prices.

Alongwith the Chinese steel makers, Indian steel producers also are in an importing spree as active steel production is going on. In India, consumption of the coal, and hence the imports, will go further up in the future as steel production capacity in the country will increase. As a matter of fact, India is poised to overtake Japan as the second largest steel producer in the world within 2018.

PRICE TREND

Offers for the Premium HCC are now hovering at around USD 232.50/MT FoB Australia, which are around the rates in the week last. However, offers for the 64 Mid Vol HCC underwent a slight dip from the week-ago rates. Offers for the 64 Mid Vol HCC are hovering at around USD 194.90/MT FoB Australia.

Source: CoalMint Research

On CFR India basis, these offers translate into: USD 246/MT and USD 208.40/MT respectively.

A Canadian Coking Coal offer was heard at around USD 207/FoB.

IMPORTS

Domestic supply inadequacy of the coal and prevalence of active steel making are the twin factors for the influx of significantly high volumes of Coking Coal imports in India. During the 1-26Feb’18 period, around 3.6 MnT of Coking Coal was imported in India, data compiled by CoalMint Research shows.