Australia-based miner Tigers Realm Coal has stated that the global steel industry is under some pressure at the moment, and this is weighing on coking coal, coke and iron ore pricing. The company said that the iron ore prices are lower than coal prices now, for the first time in several years, and it is the first time that Australian coking coal prices are significantly lower than thermal coal prices.
Regarding the coking coal market, the Asian coking coal market changed significantly in the June quarter, driven by a downturn in the global steel market including China, which was weighed down by lockdowns. China has been exporting more steel products and entering into the markets of other steel producers, which in turn has placed downward pressure on global steel markets and margins.
Tigers Realm Coal added that the tightening of monetary policy and inflationary pressures as a result of sharply higher energy prices negatively impacted steel demand across multiple sectors.
According to its statement, coking coal prices have decreased from over $500/mt FOB Queensland earlier in the year to below $250/mt FOB. Many metallurgical coal producers in Russia and Australia have changed production and processing strategies now to produce thermal coal instead of metallurgical coal where possible. For producers of lower grade metallurgical coal products, such as Tigers Realm, with coking products attracting prices of around $220-230/mt CFR, the economics of bypassing the washing plant, increasing product yield and selling thermal coal instead of coking coal looks attractive, considering the relative prices of the different products.