After having peaked to reach as high as $335/mt, coking coal prices have seen some correction in the last couple of weeks, shaking off the impact of tight supply, a consequence of floods in Australia.
Coking coal onsuming companies have become more optimistic that coking coal prices will become more moderate, allowing them breathing space in their production costs and easing their concerns over availability.
In a statement to the press, Mr C. S. Verma, chairman of Steel Authority of India, expressed his opinion that coking coal prices will further soften following the two weeks of price correction.
Meanwhile, Japanese mills have temporarily withdrawn from coking coal purchases as a result of production halts they need to go through because of the recent earthquake. This affords relief in terms of supply levels for the moment.
Furthermore, even though some more time is still required before the Australian miners resume full production, further gradual relief will also come from the supply side, easing price levels.
India's largest independent metcoke producer Gujarat NRE Coke company has said that coking coal prices for the second quarter have been settled at around $330/mt, in an interview with CNBC-TV18. Earlier in March, some coking coal producers also confirmed settling their sales prices with their customers at such a level. However, Gujarat is producing at around 2 million mt and therefore is currently not buying from third parties.
Although milder now, rainy weather continues to impact coal shipments in Australia and so Gujarat expects coal prices to remain firm for some short while before registering a certain correction. Coking coal prices are expected to start to become sustainable at more moderate levels than current levels, i.e., at around $235-250/mt, as of the beginning of the third quarter.