Australian coking coal prices tumble on market uncertainties
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Australian coking coal prices have crashed in recent days as demand sentiment weakened amid growing panic over the impact of probable coal import restrictions in China.
Over the course of the week, spot prices for Australian premium hard coking coal slumped by almost 10%, spurred by reports of China-bound coal-laden vessels being diverted elsewhere and Chinese customers deferring inbound shipments from Australia.
Meanwhile, Indian market participants are treading carefully while awaiting clarification on the rumored Chinese ban on Australian coal imports, because it will inevitably reduce demand for Australian coking coal, and near-term prices should decrease further.
Australian coking coal prices could fall further on oversupply concerns
In response to the import restrictions in China, expectations are rife that more of Australian coking coal could possibly be targeted toward India.
India at this moment, may have limited capacity in absorbing the surplus, as the country's steel demand is predicted to face a sharp decline despite recent recovery from automotive and white goods sectors, and government infrastructure projects.
Besides, it is doubtful as to whether Indian purchases of Australian coking coal can lend much support to spot prices thereof.
This is because a majority of the Indians only buy small volumes of seaborne coking coal from the spot market as the country's largest steel manufacturers source coking coal through fixed-price long-term contracts.
Australian coking coal prices are hence likely to be adversely affected in the short term, though demand has been picking up from key importers outside of China, viz. India, Japan and South Korea.
India Coal Import Shipment Vessel Lineup
CoalMint's latest vessel lineup data (as on 12 Oct'20) reveals that a total quantity of 430,875t of Australian coking coal is expected to reach various Indian ports by 24 Oct'20 -- 243,220t at Dhamra (Odisha), 78,055t at Gangavaram (Visakhapatnam) and 109,600t at Haldia (West Bengal).
There are presently no incoming shipments of PCI coal from Australia but a vessel carrying 65,000t of Russian PCI coal is expected to arrive this week at Hazira port in Gujarat.
Price Assessments
Latest prices for the Premium HCC and the 64 Mid Vol HCC grades are assessed at around $120/t (-$12/t w-o-w) and $107/t (-$17/t w-o-w) FoB Hay Point, Australia.
For Indian buyers, these prices amount to $133/t and $120/t respectively on CNF India basis.
Note: All prices are in US Dollar per tonne ($/t).
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By Aditya Sinha
