US Coking Coal Prices Follow Suit As Negative Global Sentiments Pressurize Demand

US coking coal export prices continued to retreat for the fifth straight week in a row, as headwinds from the global markets have persistently weighed on seaborne premium hard coking coal pricing.

Prime hard coking coal fob Australia prices have lately been on a consistent downward trajectory since the latter part of last month, under the influence of weakening spot demand for seaborne materials from its key export markets in Southeast Asia, viz. China and India.

Atlantic coking coal demand hit by steel cuts in Europe

The seaborne metallurgical coal market in the Atlantic region has been experiencing subdued trading activity, as the European market struggles with lower steel prices and higher input costs that hurt the profitability and cash flow generation of steel producers.

In addition, met coke demand has come under increasing pressure from widespread steel output cuts across Northwest Europe.

European steel producers are currently facing economic pressure from various external factors having jointly impacted the country's overall steel sector outlook - rising foreign imports due to ineffective trade protection measures, downturn in automotive manufacturing market, and increasing iron ore and electricity costs.

US-China Trade War

The prolonged US-China trade tensions have dampened buying interest from the world's biggest consumer of coal, although US coking coal comprises only a small proportion of China's overall imports.

Indeed, Chinese appetite for met coal is sufficiently quenched by ample availability from Mongolia, Australia, and Russia as well as domestically produced coals.

Russian Coking Coal Supply Issues to Provide Opportunity for US Suppliers

The current Russia-Ukraine political issues impacting Russian coking coal supply into Ukraine could open up opportunities for US suppliers to sell incremental tonnages to the Ukrainian mills.

Difficulties surrounding imports of coal from the Russian Federation to Ukraine emerged since April, with the Russian government imposing coal export restrictions to Ukraine.

Ukrainians are more likely to prefer US coking coal as an attractive option than Australian owing to shorter delivery times and competitive prices.

PRICE ASSESSMENTS

The latest FOB US East Coast price of low-vol hard coking coal is assessed at USD 176/MT, based on 58% coke strength after reaction (CSR), 8% ash, 0.8% sulfur and 19% volatile matter material.

For Indian buyers, the above price amounts to USD 204.25/MT on CNF India basis, after considering a USEC-India dry bulk freight rate of USD 28.25/MT for delivery by Panamax vessel class.

The US high-volatile type A (HVA) coking coal price is assessed at around USD 193/MT FOB USEC, based on 7% ash, 0.85% sulfur and 32% volatile matter.

The US high-volatile type B (HVB) coking coal price is assessed at around USD 155.50/MT FOB USEC, based on 8% ash, 0.95% sulfur and 34% volatile matter.