Australian coking coal price correction continues, further decline likely

Australian coking coal prices continued to fall throughout the week, due to limited spot demand from end-users in ex-Chinese markets.

Spot transactions reported for premium coking coals were concluded at lower price levels as sellers reduced offers to attract buyers, while buyers lowered their bid levels in view of negative short-term sentiment.

• A trade was reported done at $119/t FOB Australia for 40,000 t of Australian premium low-volatile (PLV) with late-April laycan.
  
  

• Another trade was reported done at $119/t FOB Australia for 75,000 t of Australian PLV with early-May laycan.
  
  

• Around 75,000 t of Australian premium mid-vol was done at $119/t FOB Australia with early-May laycan.
  
  

• Another trade was done for 40,000 t of Australian premium low-vol at $119.00/t FOB Australia with mid-April laycan.
  
  

Price softness expected amid tepid demand in Asian markets

In spite of the series of trades reported midweek, spot trading activity in the seaborne coking coal market has remained relatively low due to subdued buying interest from most end-users in India among other Asian importers.

Indian traders and end-users have mostly adopted a wait-and-see approach to seaborne coking coal cargoes, in expectation of further price falls.

Meanwhile, there was limited impact on spot supply following the suspension of operations at Moranbah North mine while tropical cyclone Niran has yet to cause any supply disruptions in Queensland, Australia.

Nevertheless, market participants are closely monitoring the prevalent weather conditions and potential supply disruptions in Australia.

Price Assessments

Latest prices for the Premium HCC and the 64 Mid Vol HCC grades are assessed at around $117.50/t (-4.1% w-o-w) and $111.50/t (-4.7% w-o-w) FOB Hay Point, Australia.

For Indian buyers, these prices amount to $138.50/t (-2.9% w-o-w) and $132.50/t (-3.4% w-o-w) respectively on CNF India basis.

Australia-India dry bulk freight rate is currently assessed at $21.00/t (+4.5% w-o-w) for delivery by Panamax vessel class.

Outlook

Short-term market outlook remains bearish on limited buying interest, as buyers became cautious and retreated to the sidelines citing increased price volatility seen in the spot market over the recent past.

Australian coking coal prices are largely anticipated to remain at lower levels amid continued pressure from oversupply until China's informal import ban on Australian coals is lifted.

The excess supply relative to weaker spot demand may leave spot prices soft in the near term.

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By Aditya Sinha