Australian Coking Coal: Prices Make a Surprise Uptick

Australian premium low-volatile (PLV) hard coking coal (HCC) prices inched slightly higher this week, partly due to the news of a mining production halt in Queensland -- although market participants largely held on to a bearish outlook on near-term prices amid persistent demand worries.

Seaborne coking coal prices have already dropped to record lows over the past two months with the Covid-19 viral outbreak slashing steel production globally, outside China.

Since early April, China has been the only viable market in the Asia-Pacific region for spot sales of seaborne coking coal, with all major ex-China markets struggling with depressed steel demand and the resulting buildup of raw material inventories.

Chinese Port Policies and Import Quotas Dampen Buying Interest

Presently, however, Chinese market participants are heard to remain cautious as the country's port policies have turned stricter after the Labor Day holidays. Several steelmakers in Northern China are concerned expecting at least a month of delay at the customs for cargoes with June laycan.

Moreover, Chinese buyers' ability to receive seaborne cargoes depends on their remaining import policy quotas for the first half of the year.

Furthermore, as supply continues to exceed demand in the seaborne coking coal market, end-users intend to resell their contracted cargoes into the spot market.

Indian Coking Coal Demand Hit by Lockdown-Driven Slowdown

Pessimistic demand outlook continues in the Indian market for seaborne coking coal, as automotive plants and construction projects have come to a standstill, and led to negligible demand generation for steelmaking raw materials.

Subsequent to the implementation of India's nationwide lockdown since March-end, major steel mills have been operating at reduced utilization rates, which has resulted in rapidly falling inventory demand at metallurgical coke plants and, in turn, for coking coal.

Meanwhile, above and beyond ongoing negotiations between Indian coking coal buyers and overseas sellers to defer loading dates of contracted cargoes, certain steel producers in the country have started to offer surplus supplies into China.

Australia's Grosvenor Mine Closed Following Incident - A Much Needed Sigh Of Relief

Australian coking coal spot prices heaved a sigh relief on Wednesday, with market participants mulling over the tentative impact of a mining production halt in Queensland on the country's overall supply.

Johannesburg-based British multinational mining company Anglo American has halted mining operations at one of its recently commissioned coking coal mine in Australia, following the occurrence of an accident.

A mine explosion at Anglo's Grosvenor mine near Moranbah in central Queensland occurred on Wednesday 6th May 2020. The mine has been safely evacuated and an official investigation is now under way to determine the cause of the accident.

The Grosvenor mine is a longwall metallurgical coal operation that was established in 2016, and is wholly owned by Anglo American. It produced 4.7 million tonnes of metallurgical coal in 2019.

Notably, Anglo American is the world's third largest seaborne exporter of metallurgical coal (according to the company's website) with significant operations in Australia's Queensland. The company owns two open cut and three underground metallurgical coal mines in the Bowen basin region of Queensland, along with additional joint venture projects.

PRICE ASSESSMENTS

Coking Coal

Latest offers for the Premium HCC grade are assessed at around US$ 112.00 per tonne (t) FOB Australia, while offers for the 64 Mid Vol HCC grade are presently assessed at around US$ 88.75/t FOB Australia.

For Indian buyers, the above offers amount to US$ 120.10/t and US$ 96.85/t respectively on CNF India basis.

Pulverized Coal Injection (PCI) & Semi Soft Coking Coal

N.B.: All prices are in USD/MT