Australian Coking Coal Prices Stay Flat On Thin Trading

Seaborne metallurgical coal prices have remained mostly stable over the past couple of days, as falling global steel prices have softened coking coal demand from major steel-producing nations like China, Japan, South Korea and the European Union.

Nevertheless, the Chinese delivered premium low-volatile met coal price has been gaining some strength amid reports of ongoing trade negotiations, notwithstanding the continued pressure exerted by thinning steel margins.

At the current high levels, however, seaborne coking coal prices fail to attract firm responses from Chinese end-users, especially as most buyers still adopt a cautious stance against purchasing seaborne cargoes -- in the light of uncertain port restrictions causing lengthy delays in customs clearance.

Chinese Coking Coal Prices May Follow Suit as Steel Demand Outlook Dims

Prices of both steelmaking raw materials - iron ore and coking coal - are expected to drop in China, as the downstream industrial market is showing signs of a moderation in short-term demand for steel.

China's steel demand growth is expected to decelerate in the absence of stimulus measures to support an economy hurt by volatile currency fluctuations and sustained trade tensions with the United States.

With steel companies' profitability set to deteriorate going forward, upstream demand for coking coal is likely to be particularly sluggish as the hot summer season makes its timely onset in China, when construction activity usually slows (in the days from June to the end of August).

Current Market Scenario in India

Presently, Indian domestic steelmakers are experimenting with a higher share of semi-hard coking coal and a corresponding lower share of costlier hard coking coal for making coke.

Moreover, mills are increasingly investing in upgrading their furnaces to allow the use of pulverized coal injection (PCI).

Furthermore, Indian mills are diversifying their coal sourcing, as reflected in the increasing share of coking coal sourced from across the Atlantic, and a corresponding lower share from Australia.

PRICE ASSESSMENTS

Latest offers for the Premium HCC grade are assessed at around USD 195.50/MT FOB Australia, lower by USD 1.70/MT than the average rate of USD 197.20/MT prevailing in the week gone by (10-14 Jun'19).

Offers for the 64 Mid Vol HCC grade are assessed at around USD 180.45/MT FOB Australia.

For Indian buyers, the above offers amount to USD 208.00/MT and USD 192.95/MT respectively on CNF India basis.