Rising demand boosts coking coal prices in Oct'23

The quarterly price of coking coal (October-December 2023) is poised to surpass the $300/t once again. This surge is anticipated due to the sustained high benchmark spot price, with a potential to exceed the $315/t recorded in January-March 2023 this year. Iron ore, another crucial steel raw material, is also expected to witness a significant uptick in prices during January-March next year.

Presently, the spot price of PHCC stands at approximately $340/t at Free On Board (FOB) price. Since mid-October 2023, it has fluctuated within the $340-$350/t range, firmly establishing a level above $300. Despite generally weak demand for coking coal, increased imports from India, where steel production is expanding, have bolstered spot prices. According to market participants, coking coal supply is not increasing, indicating that spot prices are likely to remain high in the foreseeable future.

Market sentiment points toward an upward trajectory in the quarterly price against Japan, a key indicator in the industry, for the (October-December 2023) period. While the final price remains uncertain, it is highly probable that it will exceed $300/t unless there is a significant drop in spot prices. There is a strong possibility that it will surpass the $315/t price recorded in (January-March 2023), reaching its peak for the year. Despite weakened Asian steel market attributed to rising exports from China, concerns about steel price declines limiting raw material price hikes emerged. However, this apprehension was dispelled by heightened imports of metallurgical coal from India. The increased demand for this essential raw material countered the expected price constraints and bolstering the outlook for raw material prices.

In summary, the coking coal market is witnessing upward price trends, driven by strong demand from expanding steel production in India and limited supply from coking coal suppliers. These factors indicate that the quarterly prices for coking coal are likely to experience notable increase in the coming months, potentially reaching their highest points for calendar year 2023 (CY23).