Australian premium coking coal prices rise sharply d-o-d on availability concerns*

Australian premium hard coking coal (PHCC) prices increased by $31.5/t d-o-d to $312/t FOB on 13 Sep'23 amid limited availability. Demand from end-users in India, especially for mid-October loading PHCC, is pushing prices higher.

Prices have risen sharply due to scarcity of cargoes due to suspension of production at BMA's mines following recent news of accidents. The timeline of resumption of operations at such mines remains uncertain. A major deal was concluded yesterday by an Indian mill for 40,000 t of Goonyella mid-volatile premium coking coal which has provided the sudden push to prices. The deal was concluded at $321/t FOB Australia, with 21-31 October laycan.

Indian steel-makers have been looking for cargoes while PMV supply remains tight. Besides, limited availability of PHCC and mid-volatile cargoes by Australian miners, which is the most preferred by Indian steel mills, has led to procurement at higher prices. End-users have little choice but to accept current prices in a fast-rising market to secure cargoes to continue running their facilities.

Operations at BMA's Peak Downs mine in central Queensland were suspended yesterday after two trucks slid. The suspension applies to certain parts of mine operations.

Where are prices headed?
The sudden surge in prices may not sustain as most end-users will be unwilling to pay above $280/t FOB levels. Amid limited supply of PHCC and the shrinking spread with met coke, mills may even opt to lower their coking coal purchases. Chinese met coke prices are currently assessed at $330/t CFR. In the Chinese domestic market, prices have increased and merchant cokeries are struggling with weak margins. Hence, the situation remains uncertain, as the spurt in coking coal prices may drive coke prices upward.

*Corrected