US coking coal exports up in March

Market: Coking coal, Metals
10/05/19

Coking coal exports from the US totalled 4.97mn t in March, up by 10.4pc on the year, driven by increased shipments to Asia and Poland, US Census Bureau data shows.

Exports to Japan rose by 15.9pc to 699,721t, while shipments to South Korea imore than trebled to 423,765t and shipments to China more than doubled to 175,000t.

US coking coal shipments were boosted by a global increase in demand from steelmakers, with resulting higher fob prices making Asia an attractive destination for US producers, despite competition with Australian firms that enjoy lower freight rates into the region. US sales have also been supported by Australian supply problems.

Australia is the largest exporter of coking coal to Japan, but supply uncertainty over production problems and longwall moves in Australia pushed Japan to diversify its imports. Canada and Russia also emerged as sources of significant coking coal shipments to Japan in March.

The supply problems in Australia also buoyed US exports to South Korea and China in March.

Despite the Chinese tariff on US coking coal, Chinese buyers are continuing to negotiate with certain US suppliers — in particular Xcoal — for low-sulphur coking coal products that are not available domestically. Shipments to China appear to be recovering from the second half of 2018, when exports fell after China imposed an additional 25pc tax on imports of US coal. US coking coal shipments to China in the first quarter totalled 394,000t, down by 48.2pc on the year.

Supply disruptions in Australia have also meant that India is growing in significance as a destination for US coking coal. But shipments to India in March fell by 18.1pc on the year to 641,777t. But this follows from February, when Indian coking coal imports surged as a temporary dip in prices prompted more steelmakers to build up stocks.

Exports to India could pick up in future trade data releases, reflecting a recent flurry of negotiations with US suppliers as Indian mills restocked ahead of the monsoon.

Brazil has regularly been the top destination for US coking coal, with receipts totalling 7.63mn t in 2018, ahead of Japan's 5.43mn t. But in March, US shipments to Brazil of 524,915t fell behind Japan, the month's largest recipient.

The Argus fob Hampton Roads assessment for high-volatile type A (HVA) coking coal averaged $200.78/t in the first quarter, down from $208.92/t a year earlier, but still up from $184.13/t fob in the first quarter of 2017. The Argus high-volatile type B (HVB) coking coal index averaged $164.74/t fob Hampton Roads in January-March this year, up from $139.51/t a year ago and reflecting how seaborne demand for HVB in particular has strengthened in the past year.

Domestic disruptions boost Polish demand

Poland imported 202,685t of US coking coal in March, up from 93,917t in the same month last year, as domestic production disruptions led to steel plants diversifying their sources. In January, earthquakes caused a collapse at part of Polska Grupa Gornicza's (PGG) Rydlutowy mine and also hit Jastrzebska Spolka Weglowa's (JSW) Knurow-Szczyglowice mine in southern Poland, opening up the market to US suppliers of high-volatile grades.

Coking coal shipments to Polish ports are also delivered on to mills in neighbouring countries, including US Steel in Slovakia and Moravia Steel in the Czech Republic. The ports of Gdansk, Gdynia and Swinoujscie received over 500,000t of coking coal in March from a wide range of destinations, including Australia, Russia, Canada, the US and Mozambique, port data shows.

But elsewhere in Europe, US coking coal shipments are less robust. German coking coal receipts notably fell by 60.1pc on the year to 87,652t in March, dragged down by lower steel production as the country's automotive production continues to decline.

Key US coking coal export destinations tonnes

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