Ex-Australia coking coal price rebounds in fresh deal, tight supply still weighs on sentiment

Notwithstanding the ongoing tightness in coking coal supply in leading supplying regions, this week the market has been quite active and slightly volatile. In particular, at the beginning of the current week an ex-Australia March 1-10 laycan 45,000 mt cargo of premium mid-volatility hard coking coal (HCCA) was booked by a major Indian steelmaker at $439-440/mt FOB. This is a $5/mt decrease compared to the level achieved in the previous deal done in late January. A 30,000 mt cargo of high ash semi-hard coking coal (SHCC) was purchased in combination to the abovementioned cargo, SteelOrbis has learned. Nevertheless, by the end of the current week, the ex-Australia coking coal price has rebounded to $442.5/mt FOB in the latest deal for 20,000 mt March 1-10 laycan, again to India. “There is not a very big margin even at these high prices [for metallurgical coke]. The landed cost of coking coal is turning out to be extremely high compared to the previous levels,” an India-based source stated.

With the gradual return of Chinese customers after the Lunar New Year holiday, Russian suppliers of coking coal have started testing the market with new offers above $300/mt CFR compared to $240-250/mt CFR in late January. “A few crazy offers were voiced but they do not make sense at such a level,” a major international trader commented. “There is still super tight supply in the market, which will continue to weigh on the market developments,” a trader stated. However, ex-Russia PCI has been traded at lower-than-expected levels. Specifically, a deal for 80,000 mt has been heard at $280/mt CFR to China this week, while before the New Year Holiday the material was mostly offered at $290/mt CFR.  

Meanwhile, coke prices in Tangshan have moved down by RMB 400/mt ($63/mt) compared to January 28 amid the increasing inventory levels to RMB 2,660/mt ($418/mt) ex-warehouse, according to SteelOrbis’ data. However, prices are expected to rebound after the Olympic Games.

In the futures market, despite an uptrend during the given week, coke prices have failed to reach the pre-holiday levels. Accordingly, as of Friday, February 11, coke futures prices at Dalian Commodity Exchange (DCE) are at RMB 3,095/mt ($487/mt), RMB 5/mt ($0.8/mt) lower compared to January 28. However, coal prices at DCE have risen by 3.1 percent week on week to RMB 2.352/mt ($370/mt).

$1 = RMB 6.3681