Some slight decline has been seen in Australian premium hard coking coal (PHCC) export prices this week after one deal signed at a lower level. In particular, a contract for 75,000 mt of Peak Downs low-volatile PHCC was done at $243/mt FOB for July shipment. This level is down by $2/mt from the previous contract for PHCC and down $4.5/mt from the assessment in the middle of this week. Market sources said that demand for PHCC has been limited from India, which was the main source of demand growth earlier this year. The monsoon season is expected to start in India and Indian mills may consider adjusting production of steel, which will keep interest in expensive coking coal limited.
Nevertheless, China’s import coking coal market has remained strong with the tradable levels for PHCC at $255-260/mt CFR, up from the previous deals reported as having been done late last week at $240-250/mt CFR and at levels at $230-235/mt CFR ten days ago. A deal is heard to have been done at $255/mt CFR for mid-volatile PHCC earlier this week. Some traders have been too aggressive, increasing offers to $265-275/mt CFR, which is unlikely to work out in the near future.
As for now, 77 Chinese mines in Shaanxi Province have officially resumed production out of a total of 137 coking coal mines, which had to suspend work after the accident in late May. Though this is assessed as a positive signal, the production rates are lower than normal - at around 60-70 percent of normal mining rates. Also, inspections at major coal mines will continue in the coming months, so further sharp increases in coking coal production in China in the near future are unlikely. Some market sources expect an increase in demand for Mongolian coking coal in the short term.
