Australian coking coal export prices soar on robust demand, limited supply

Australian coking coal prices have steadily increased throughout the week, backed by strong buying interest from traders and end-users in ex-China market and limited spot availability, alongside fresh bookings concluded at higher levels.

Firm restocking demand was observed from end-users, as the Australian premium grades of coking coals are still competitively priced relative to the US and Canadian materials -- despite prices thereof having been boosted by strong buying interest from Chinese buyers.

In the Chinese market, supply tightness of premium coking coal - caused by insufficient domestic supply and limited overseas supply, following import restrictions on Australian coals and Covid-related disruptions affecting Mongolian supplies - gave support to rising offer prices while demand was still steady despite concerns on steel production curbs.

Notably, prices of imported premium hard coking coal delivered to China hit an all-time high of $410/t on Wednesday, 25 Aug -- up by over 25% since the end of July.

Price assessments

Premium low-volatile (PLV) hard coking coal (HCC) and 64 Mid Vol HCC grades are assessed at around $246.00/tonne (t) (+8.4% week-on-week) and $215.00/t (+7.8% w-o-w) FOB Hay Point, Australia.

For Indian buyers, these prices amount to $273.70/t (+8.1% w-o-w) and $242.70/t (+7.5% w-o-w) respectively on CNF India basis.

Australia-India dry bulk freight rate is currently assessed at $27.70/t (+5.5% w-o-w) for delivery by Panamax vessel class.

Trade deals

A deal for 75,000 t of globalCOAL HCCA branded Australian premium mid-volatile Moranbah North, with Oct'21 laycan, was concluded at $250/t FOB, on Thursday, 26 Aug. Besides, incremental bids were reportedly heard at $243/t and 245/t FOB Australia by two buyers, bidding for the same cargo.

Outlook

The spot availability of Australian premium hard coking coals is expected to improve from the next month. Consequently, this will cool off prices to some extent, which may fuel further demand from the Indian market participants.

Moreover, the Indian steel mills are expected to honor their quarterly contracts irrespective of the surging of prices since steel production would likely be at optimal levels post-monsoon when demand is expected to return.

Furthermore, with the expected near-term price drop, there can be incremental demand from India, the world's second-biggest coking coal importer.

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