With the absence of major consumers in Asia due to the start of the Lunar New Year holiday, trading in the global coking coal market has been muted. At the same time, Australia-based suppliers are not in a rush to give any firm offers, aiming to evaluate the current market situation properly and to determine price levels, taking into account the recent developments with regard to supply issues. Specifically, market insiders claim that Australian miner and leading exporter BHP Billiton will have tight supplies from its Peak Downs deposits until June this year. Moreover, in March the company’s supply of premium low-volatility hard coking coal (HCCLV) will be reduced. “They [BHP] downgraded their production guidance for the current year, but a contraction is already seen in the market. It is said that April cargoes will not be released until late February,” an international trader based in Asia stated. As SteelOrbis reported previously, in the 2022 financial year BHP’s metallurgical coal production is expected to be between 38 million mt and 41 million mt, down from 39 million mt and 44 million mt voiced previously. In addition, Anglo American’s metallurgical coal production at its Moranbah mine is reportedly still affected by areas of challenging geology.
With the ongoing tensions between Russia and Ukraine, concerns over tight supply have risen further. The disruptions of coal shipments from Russia as a result of sanctions or even any delays would further tighten the balance in the global coking coal market. “I’ve heard the Russian rail network has been effectively crippled by the military, with all available trains focused on bringing soldiers and weapons. As a result, domestic logistics are dramatically affected and coal producers cannot rail anything to the ports,” an international trader said. “Actually, an impact has already been seen. Coal from Kuzbass is almost not moving to Black Sea. Big delays. Not sure if there are escalations of tension. But the railway is simply busy with military movements,” another international trader commented. However, there are market insiders with a fundamentally different insight. “The conflict is escalated by the media. There are logistic problems, but not more than usual,” a market source noted. “There are only verbal rumors. I haven’t heard of any shipments affected yet,” another player stated.
The latest trade for ex-Australia HCCA, for March shipment was done on January 21 at $445/mt FOB Australia, as SteelOrbis has reported earlier.