Australian coking coal prices remain under pressure from China import ban

Australian coking coal prices continue declining amid oversupply concerns arising from subdued buying interest in Asian markets excluding China, with a mismatch of brands between demand and supply.

However, strong demand for non-Australian coals exists in the Chinese market following the country's informal import ban.

Australian coking coal prices dip further amid supply glut

Australian coking coal prices have gone into free fall after China's informal ban on Australian coal imports since mid-October.

China's verbal notice to halt imports of Australian coal distorted the wider seaborne spot market because China is the biggest buyer for spot cargoes of Australian coking coal. However, some market participants are viewing this as a common practice by Chinese authorities to reduce coal consumption in energy consuming industrial sectors such as steel to reduce pollution and carbon emission.

Nevertheless, as Chinese end users were obliged to import coking coal from countries such as Canada and the US, ex-Chinese buyers gained more bargaining power with China-bound Australian coal cargoes diverted elsewhere at steeply discounted prices.

Australian premium hard coking coal prices came under selling pressure as spot demand in Southeast Asian markets remained weak, with ex-Chinese buyers staying on the sidelines in hopes that offers could fall further in light of the current market weakness.

Meanwhile, China delivered prices rose to an eight month-high at $165.50/t on fresh bookings concluded in the premium low-volatile segment and limited availability of non-Australian cargoes.

In all, the seaborne coking coal market outside Australia is expected to strengthen in the ongoing quarter amid continued recovery in global steel demand from full-fledged resumption of industrial and construction activities.

India Coal Import Shipment Vessel Lineup

CoalMint's latest vessel lineup data (as on 16th Nov'20) reveals that a total quantity of 1,001,240t of Australian coking coal is expected to reach various Indian ports during this month.

96,000t Dhamra (Odisha)

229,000t Gangavaram (Visakhapatnam)

256,240t Haldia (West Bengal)

285,000 Jaigarh (Maharashtra)

135,000 Vizag (Andhra Pradesh)

Price Assessments

Latest prices for the Premium HCC and the 64 Mid Vol HCC grades are assessed at around $97.25/t and $90.50/t FoB Hay Point, Australia.

For Indian buyers, these prices amount to $109.80/t and $103.05/t respectively on CNF India basis.

Australia-India dry bulk freight rate is currently assessed at $12.55/t for delivery by Panamax vessel class.

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By Aditya Sinha