Asia coking coal pricing steady as buyers hang back

Source: PLATTS

The Asia coking coal market held steady Thursday, with Chinese buyers hanging back from accepting current premiums.

S&P Global Platts assessed premium low vol flat day on day at $232.75/mt FOB Australia Thursday, while CFR China prices remained steady at $233.50/mt.

In Australia, some miners continued to grapple with railing issues and were seeing some reduction in tonnage. “The rail situation is not good. We don’t know how long this situation will last,” said one miner source, adding rain was making the situation worse.

There were also outages on the Goonyella coal rail line, with delays occurring and “service cancellations are likely,” operator Aurizon said in a letter Thursday seen by Platts.

However, there appeared to be no panic buying yet from end-users.

One Asian trader source said he was largely unaffected by the disruptions, but sentiment from buyers was “getting stronger.” He added there seemed to be a limited amount of premium coal in the market.

Another trader source said there was no cause for concern for the moment, adding he was skeptical a recently announced 20 million mt/year reduction in coal volumes by Aurizon would take place. “I don’t see such strong demand in the FOB markets; I think it is time prices fell to levels equivalent to a netback from China price levels,” he said.

No fresh offers were heard Thursday. The highest bid heard was at $217.50/mt FOB Australia for a premium low-vol coal with 73-75% CSR.

In China, buyers appeared to hang back from procuring imported coals, despite some need for restocking.

One buyer source said that while there was room to restock, current prices were too high, adding an Australian premium low-vol coal with 73-75% CSR would not trade higher than $235/mt CFR China.

There was talk of a potential tender emerging for such a coal Thursday, but no trade was heard done by the end of the day.

One trader source said this could indicate what prices Chinese market buyers were truly willing to accept.

In China’s domestic coke market, there was some talk another price hike was being considered, but it had yet to occur.

One seller source said such a hike may be difficult to implement because Chinese steel mills were largely well stocked for coke, adding the previous uptick was due solely to cokeries having insufficient margins relative to steel mills. He estimated margins for cokeries at roughly Yuan 100-200/mt ($15.72-$31.45/mt).

Source: PLATTS