Chinese steelmakers have continued to prefer ex-Russia coking coal due to its attractive price compared to prices from North America. Russian suppliers, in turn, with their disadvantaged position amid unprecedented economic sanctions, have remained highly flexible in negotiations.
SteelOrbis has learned that yesterday, May 31, Russia’s Mechel closed a tender for 25,000 mt of K10 coking coal at $246/mt CFR China, for May 31-June 4 laycan. Given that two weeks ago Chinese customers were ready to book at $280/mt CFR, a supplier has decided to secure an order now, aiming to protect itself from a lower price in the coming weeks. However, some market insiders expect a rebound in prices in the future, citing a recovery of local and futures steel prices in China with the pandemic situation easing in Shanghai. A new tender for 21,000 mt of Mechel's K10 coking coal, for 4-8 August loading, is scheduled to be closed today, June 1. “It should be higher. They are following Chinese developments,” a Chinese market source stated. However, no details have been reported so far. “China is on track for a recovery, although any improvement is expected to be moderate. A meaningful recovery is expected from July onwards,” a trader commented. Coking coal produced by Russia-based Raspadskaya Coal Company is said to be available at $220-240/mt CFR China. “It seems that China is swamped with all these Russian cargoes,” an international trader stated.
Meanwhile, in the physical local market, ex-Russia Inagli coking coal offers have been heard at RMB 2,100/mt ($315/mt) ex-warehouse, while washed coking coal produced by Russia’s Elga Coal Company is available at RMB 1,900/mt ($285/mt) ex-warehouse, including 13 percent VAT.
In the futures market, prices have strengthened considerably. Specifically, at Dalian Commodity Exchange (DCE), as of Tuesday, June 1, coking coal futures prices increased by 8.6 percent compared to Friday 27 to RMB 2,780/mt ($417/mt), while coke futures prices have risen by 6.9 percent to RMB 3,583.5/mt ($537/mt) in the same period.
Meanwhile, Chinese exporters of coke have also started to test market with higher offers. Specifically, ex-China 25-90mm of BF grade metallurgical coke (64% CSR) prices have returned to the levels valid two last weeks ago, namely to $580/mt FOB. In the meantime, ex-China coke breeze is offered to Japan, India and Taiwan at $380/mt CFR, $390/mt CFR and $400/mt CFR, respectively.
$1 = RMB 6.6698