Australia: Coking coal prices continue rising on firm ex-China demand

Australian premium hard coking coal prices continued to increase over the past week, with several high-priced spot trades concluded in the ex-China markets, while on-spot availability of premium cargoes remained tight.

Even as the demand for Australian coking coal has been persistently high in most Asian markets excluding China, the Indian demand for seaborne coking coal has lately remained largely subdued, primarily because both steel demand and metallurgical coke prices are declining due to the prevalence of the monsoon season.

Meanwhile, ongoing safety checks and suspension of operations at various coal mines in China, coupled with the country's ongoing import restrictions on Australian coals, have fuelled supply concerns among end-users seeking prompt delivery of premium grade coking coal.

Price assessments

Premium low-volatile (PLV) hard coking coal (HCC) and 64 Mid Vol HCC grades are assessed at around $212.50/tonne (t) (+0.7% week-on-week) and $184.00/t (+0.7% w-o-w) FOB Hay Point, Australia.

For Indian buyers, these prices amount to $239.40/t (+1.0% w-o-w) and $210.90/t (+1.0% w-o-w) respectively on CNF India basis.

Australia-India dry bulk freight rate is currently assessed at $26.90/t (+3.5% w-o-w) for delivery by Panamax vessel class.

Trade deals

A trade 75,000 t of Peak Downs branded Australian PLV HCC was concluded at $207/t FOB, with mid-Aug'21 laycan.

A trade for 35,000 t of Saraji branded Australian PLV HCC was concluded at $200/t FOB on 5 Jul'21, with late-Aug'21 laycan.

Moreover, re-export offers for Australian PLV HCC were reported from several Chinese traders and end-users.

Furthermore, a major European end-user issued a buy tender for Australian Peak Downs North branded premium mid-volatile matter, with an end-Aug'21 laycan.

Stock positions at major ports in India

Total coking coal stocks at major Indian ports at the end of last week had increased to 6 million tonnes (mn t), up by 2.61% w-o-w against 5.85 mn t in the previous week.

Presently, coking coal stocks at Paradip port are at 1.76 mn t, down by 3.84% w-o-w; while inventory at Dhamra port is at 1.49 mn t, up 13.92% w-o-w.

Major Indian ports include Gangavaram, Paradip, Mundra, Vizag, Dhamra, Krishnapatnam, Kandla, Haldia, Navlakhi, Magdalla, Hazira, Karaikal, Tuticorin, Dahej, Goa, Jamnagar, Mangalore, Bhavnagar, Kakinada, Muldwaraka and Pipavav.

Outlook

Market participants anticipate Australian premium coking coal prices to stay firm on account of limited availability of prompt-loading cargoes for near-term deliveries.

Indian buyers are not expected to resume full-scale restocking in the near term despite the easing of lockdowns in several states, as end-users are presently well-stocked with sufficient inventory levels.

Nevertheless, Indian traders are largely anticipating that the country's imported coking coal demand would improve to a certain extent due to restocking needs for Q3CY21 after the offset of the monsoons.