Atlantic coking coal: Market remains under pressure

Market: Coking coal, Metals
22/08/19

The Atlantic coking coal market remains under considerable pressure, with demand still sluggish and several sources expecting seaborne prices to drop further.

The Argus daily fob Hampton Roads index for low-volatile coking coal is down by 50¢/t today at $150/t. The daily high-volatile type A assessment is down by $1/t at $152/t fob Hampton Roads — its lowest since November 2017.

The high-volatile type B (HVB) index has also shed $1/t to reach $138.50/t fob — its lowest since April 2018.

Prices for off-spec HVB are cited in Europe as low as the mid-120s fob Hampton Roads, with some still available for third-quarter delivery. The material being referenced is of a lower quality than grades typically factored into indexes, but the low price relative to indexes indicates the bearishness of European sentiment at the moment.

Overall, demand for extra spot tonnes remains extremely limited. A northwest European mill is understood to have booked 20,000t of HVB from a regular supplier, although the deal has not yet been confirmed.

Turkish mills are conspicuous by their absence, with some time having passed since they sought top-up cargoes of coking coal, PCI or metallurgical coke, and several suppliers wondering when the next round of tenders will materialise.

Brazil is possibly generating the biggest buzz at the moment, with two steelmakers having recently issued tenders for multiple coking coal products for 2020 delivery, including PCI, met coke and anthracite.

Concerns are building about how far the current downturn might go, with the margins of coking coal producers in Russia, the US and Mozambique all said to be entering uncomfortable territory. Russian suppliers in particular are proving particularly "flexible" on pricing for coking coal and PCI, reflecting how weak demand is and also how they are prioritising cash flow generation over high prices, a trader said.

Met coke

The European met coke market is offering up occasional pockets of buying interest, although overall demand for blast furnace coke is extremely low.

Market participants note some demand in Germany, where one mill is understood to have recently booked an extra 20,000t of blast furnace coke to cover its needs until late October, after which it might be seeking another 20,000t. But these kinds of opportunities are sparse, and sellers are competing fiercely to win the business.

A western European market participant pegged prices for imported blast furnace met coke with CSR of 60+ at around $270/t fob ARA, plus or minus $5-10/t.

Polish suppliers are said to be offering blast furnace coke "a bit on the high side", as they are also taking into consideration their term contract pricing, albeit their offer levels are coming down slightly.

Some European mills continue to offer their own met coke in the merchant market. There has not been much uptake for this material through the summer, although some traders have lately confirmed occasional bookings, indicating some successful redistribution of excess tonnes across the continent.

European demand for coke breeze is fairly healthy, compared with the blast furnace and nut coke segments — to the extent that some Europeans are considering importing it from China despite quality concerns. Market participants pegged coke breeze prices at $170-180/t fob ARA depending on grade, but one added that this price range would only be viable for smaller tonnages.

Colombian prices for blast furnace coke are pegged at $275-280/t fob, and nut coke at $200-220/t fob, depending on specification.

European demand for Colombian coke is limited, in line with the broad trend, but more local opportunities are noted, with one Brazilian buyer currently seeking 360,000t of Colombian met coke for delivery over a 12-month period.

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