According to sources, Canada’s Teck Resources, North America’s largest producer of coking coal and the second-biggest seaborne exporter, is watching the market closely given the upward trend of coking coal in the last two weeks, but at the moment is not planning to expand production.
Teck Resources can expand output at its various North American facilities in relative short notice, but the company is reportedly waiting for further growth in the steel industry in India, as well as a clearer understanding of development in China. Given the magnitude of demand for coking coal from China, China remains essential in driving both short-term and longer-term pricing for coking coal.
Important developments include China’s economic growth policies on infrastructure spending and construction, removal of excess steel capacity, pollution control regulations, and imports from North Korea.
China imported 1.45 million mt of coking coal from North Korea in January 2017, down 28 percent from December. In 2016, China imported 22.4 million mt of anthracite coal (an alternative to coking coal) from North Korea, an increase of nearly 15 percent from 2015. Mongolia was the second largest exporter of coking coal to China in 2016 at 23.6 million mt (an 85 percent increase from 2015) and Australia remained the top source for the year at 26.8 million mt (a 4.8 percent increase from 2015). Imports from Canada and Russia declined 9.3 percent and 19.4 percent, respectively, in 2016.
Given China’s recent announcement of halting coking coal imports from North Korea, other regions such as Canada may have an opportunity to expand production to meet the 21 million mt shortfall in 2017.
According to sources, coking coal prices averaged at around $143/mt in 2016 and the same is expected for in 2017, excluding major market changes.