Atlantic coking coal: US prices stabilise

28-Jan-2019

US export coking coal prices have stabilised in the past few days following the recent seaborne downturn, as firmer Asia-Pacific price conditions lent support while some discussions are understood to be underway for new bookings.

The Argus weekly fob Hampton Roads assessment for low-volatile coking coal is at $183/t today, down on the week by 50¢/t. The weekly fob Hampton Roads assessment for high-volatile type A (HVA) coking coal is down by $1/t at $194/t but the high-volatile type B (HVB) assessment has edged up $1.50/t to $158/t.

Atlantic trading activity is still fairly subdued, but some market participants confirm a few enquiries particularly for US material. More enquiries are expected to emerge in the next few weeks as mills look to fill gaps in their delivery schedules for the coming months, following a cautious approach to bookings in the fourth quarter.

Near-term price outlooks remain mixed, but US producers are confident that prices for high-volatile grades will continue to gain some support from tight supply fundamentals for the time being.

One producer noted that widespread speculation that Asia-Pacific prices have bottomed out may now spur some European mills to step forward and book additional tonnage, but the mills themselves are yet to confirm any such mind-set with actual purchases.

Ongoing US-China trade talks are also bolstering US sentiment, with some sellers hoping to regain access to the Chinese market if Beijing lowers its import tariff on US coal, and one major producer understood to be looking at Chinese opportunities closely.

That said, some US tonnage that was previously sold to China has already found a new home either in South America or with domestic US mills, indicating that US coking coal suppliers are by no means reliant on regaining access to the Chinese market in order to maintain strong sales.

Looking to Australian supply, vessel tracking data indicate a spate of fixtures from Queensland to the Netherlands, due for January departure and likely arrival in March. The five vessels lined up so far for January will be carrying a combined 877,721t of coal, of which at least 600,000t is estimated to be coking coal.

To put that volume in context, December line-ups indicated four vessels with a combined 625,237t leaving Australian ports for Europe, of which at least 450,530t is estimated to be coking coal. Two of those vessels were bound for the Netherlands, with the remainder marked for Poland and France.

Freight rates choppy

Delivered prices into Europe are being subjected to choppy freight market conditions, with some sharp spot movements lately. Capesize rates from Queensland to Rotterdam fell by $2.75/t week on week to $11.50/t yesterday, but edged up to $12.20/t today due to an iron ore rally. The recent downturn was in part owing to seasonal factors, but further exacerbated by China’s lunar new year falling earlier this year than in 2018.

Capesize freight rates face an uncertain medium-term outlook, with market participants wary of a steep year on year rise in bunker fuel prices, and also wary that the global fleet might contract this year as vessels are temporarily removed to have scrubbers installed.

Panamax freight rates from the US east coast to Rotterdam have also come under pressure lately amid an oversupply of dry bulk vessels, last assessed by Argus at $9.25/t.

Source: ARGUS MEDIA