Supply concerns in Australia and in the local Chinese market have led to an increase in ex-Australia premium hard coking coal (PHCC) prices by $15/mt over the past week.
A deal for 40,000 mt of mid-volatile PHCC was done at $312/mt FOB for December 15-24 laycan on Thursday to an Indian end-user. This price is up from bids at $305-306/mt FOB at the highest in the middle of the week and a contract at $296.5/mt FOB on Friday last week. “Supply factors are the main thing now. The market has changed completely and no one has material. [Australian] Hay Point continues to experience delays,” a Singapore trader said, adding that after the mine accident in China’s Shanxi Province on Thursday the situation has deteriorated.
Yesterday, November 16, a fire in the offices of one of the major coal companies in Shanxi Province - Yongju Coal - killed 26 people and injured at least 36. The accident has already led to tough inspections on the other 27 coal mines in the province and will lead to lower domestic supply and rises in local coal prices.
In such conditions, Chinese customers have come back to Australian coal with a few deals already reported in the market. Early in the week, the tradable level for PHCC in China was at $300/mt CFR, adding $10-15/mt from the previous week. But in the middle of the week, at least one deal was signed at $310/mt CFR in southern China, while northern Chinese mills were bidding at $300-305/mt CFR. Morevoer, two other deals have been closed at close to $320/mt CFR to Chinese mills at the end of this week “after the news about the accident,” a trading source said. There have been no details about volumes, but market sources agree that most trades are for low-volatile material. “Now, suppliers will target $320-330/mt FOB for low vol as China is back,” a soource said.
Russian suppliers have followed the trend. New offers for K10 premium HCC have been voiced at $240-245/mt CFR China, up from the previous contract at $225/mt CFR. In addition, K4 offers have reached $220/mt CFR, up from $210/mt CFR voiced early in the week and $195-200/mt CFR last week. Ex-Russia PCI was traded at $162/mt CFR early this week, with offers up to $170/mt CFR at the lowest now.
The SteelOrbis reference price for ex-Australia PHCC has settled at $312-315/mt FOB with the midpoint at $313.5/mt FOB, up by $13.5/mt over the week and $8.5/mt from the previous day, November 16.
