Prices for ex-Australia premium hard coking coal (PHCC) fell by $25/mt in a deal done yesterday, October 18, to what market sources assess as a “more reasonable price” in the current market conditions. Some further small decline is possible as bids from India have also retreated since, but market sources do not expect any big decreases soon.
A deal for 40,000 mt of mid-volatile PHCC for December 11-20 laycan was done at $340/mt FOB at globalCOAL on October 18, down from offers for the same material at $365-367/mt FOB early in the week and $369-370/mt FOB late last week. “There are no new deals or offers at lower levels yet, but I think $340/mt FOB is okay, more reasonable than $360-370/mt FOB,” a trader said. The latest price decline in the Australian market was more rapid than expected and connected mainly with lower re-sale offers by mills and traders, rather than miners’ weaker positions. “Now miners will have to accept $340/mt FOB. Bids from Indian producers are already at $330/mt FOB,” another source said.
The tradable level in the import PHCC market in China has also weakened, to $290/mt CFR from, $295-300/mt CFR last week. But this price can be achieved only for ex-US premium material, so customers are still focusing on local purchases or cheaper Russian coal. For instance, the tradable level for Russian PCI has been reported at not above $160-165/mt CFR, versus the highest deal done at $185/mt CFR in the middle of last week and negotiations at $168/mt CFR early this week.
In addition, early this week a cargo of premium hard coking coal K10 from Russia was sold to China at $222/mt CFR. Though this level is lower than the $230/mt CFR target seen early in the month, this price is already assessed as too high for the current market conditions. A number of market sources believe that Chinese buyers are unlikely to pay above $200-210/mt CFR for K10 and $190/mt CFR for K4.