Waning Demand Pulls Down Coking Coal Prices in International Markets

The international Coking Coal market is moving along the expected lines. The prices are declining, irradiating sufficient indications of the prices to fall further to significant levels.

Sellers in Australia, the main international supply market, are compelled to lower their export offers due to the lackluster buying affinity among the steel makers across the major importing nations. The steel makers have temporarily halted their imports as the prices shot up to significant heights. Simultaneously, the resumption of mining activity after the New Year holidays getting over in Australia has eased the supply tightness--compounding to the price decline.

In China, the largest consuming market, the steel makers have stopped stocking the coal inventories, and waited for further fall in the coal prices in Australia. Moreover, the domestic Coking Coal prices have dropped to around Yuan 1,470/MT, which also indicates that the buyers there will prefer their home markets rather than the Australian market for the coal purchases. In view of this, Australian sellers will have to bring down their export offers to match the price difference to prompt the Chinese steel makers to import.

Export offers for the Premium HCC have come down to around USD 236.50/MT FoB Australia, down by around USD 22.75/MT over the rates in the week last. At the same time, there was some demand for the 64 Mid Vol HCC that restricted the export offers from sliding from the week-ago rates--these offers have hovered at around USD 185.60/MT FoB Australia.

Source: CoalMint Research

For the Indian buyers, these offers translate into: USD 249.25/MT and USD 198.35/MT respectively on CFR India basis.

Similar to the global peers, the Indian steel makers also are avoiding stocking the coal in the hope of seeing significant downward correction in the prices.

In the Indian context, imports will continue to rule in the future as the steel makers in the country have no other option but to procure from foreign market. There is inadequacy in the domestic production in India; and the Coking Coal produced in the country is of lower quality due to constitution of ash.