US metallurgical coal export prices fell further this week as steel mills around Europe are curtailing production, by idling blast furnaces or operating at minimum capacity levels, in response to weaker demand caused by the corona virus outbreak.
Given the rapid spread of COVID-19 since end-January 2020, there has been an inevitable decline in demand for steelmaking raw materials, owing to widespread steel mill closures across major Asia-Pacific nations along with the wider European market.
Atlantic metallurgical coal and coke markets have already been facing potentially lower spot activity with lack of spot demand in Europe. Prices have come under further pressure in the past few weeks, amid weak buying among European steel mills resulting from a further weakening in European steel demand.
European steel demand has plunged as much of the continent’s automotive sector has ceased production in recent days following the corona virus outbreak. The automotive industry accounts for 12% of all steel demand.
US low-vol HCC price assessments fell, in particular, due to the lack of spot demand in the Atlantic met coal markets as well as worsening demand outlook for seaborne coking coal and PCI in the major Asia-Pacific markets of China and India.
Indian demand for seaborne coking coal is expected to remain subdued in the near term, as the country’s government has enforced a total lockdown over its population of 1.3 billion people for 21 days starting Tuesday March 24 as a preventative measure to control the spread of the deadly corona virus.
However, India’s apparent curfew is likely to impact the US coking coal export market because India is a key buyer of both coking and thermal coal from the United States.
It is worthwhile noting that Indian coal imports from the US attained a 5-months high total of 1.77 MnT during Jan’20, as it increased by 65.3% M-o-M from 1.07 MnT in Dec’19, based on the latest customs data obtained by CoalMint Research.
Meanwhile, China had been emerging as a bright spot with spot demand for US coking coal, but weaker domestic coking coal prices and falling met coke pricing has led to a pause in seaborne buying interest from the country’s end-users.
PRICE ASSESSMENTS
The latest FOB US East Coast price of low-volatile hard coking coal is assessed at USD 128.00/MT, based on 58% coke strength after reaction (CSR), 8% ash, 0.8% sulfur and 19% volatile matter material.
For Indian buyers, the above price amounts to USD 151.00/MT on CNF India basis, after considering a USEC-India dry bulk freight rate of USD 23.00/MT for delivery from the Port of Hampton Roads by Panamax vessel class.
The US high-volatile type A (HVA) coking coal price is assessed at around USD 127.00/MT FOB USEC, based on 7% ash, 0.85% sulfur and 32% volatile matter.
The US high-volatile type B (HVB) coking coal price is assessed at around USD 122.00/MT FOB USEC, based on 8% ash, 0.95% sulfur and 34% volatile matter.
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