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China should tighten controls on met coal imports: CCTD

  • Market: Coking coal
  • 11/05/20

China's state-backed coal transportation and distribution association (CCTD) has taken an unprecedented step to call on authorities for tightened restrictions on imported metallurgical coal, as lower seaborne prices make it increasingly difficult for domestic met coal producers to remain competitive.

"Steel producers all over the world have greatly reduced steel production in response to a slowing global economy and the global outbreak of Covid-19, resulting in a significant drop in worldwide demand for coking coal," the CCTD said. "As a result, worldwide met coal producers have diverted most of their supply towards China at prices lower than domestic met coal producers."

The CCTD has called for authorities to strictly limit imported met coal volumes, and for steel producers who exceed set volume quotas to be banned from importing. Long-term contracts signed between mills and domestic met coal producers should also be strictly enforced and honoured.

Coking coal producers in China have complained that it has become increasingly difficult to maintain long-term contract relationships with customers with seaborne coking coal prices at low levels, while steel producers also have a duty to ensure that domestic met coal producers remain profitable.

Market participants see the complaint as a likely precursor to tighter import restrictions for Australian coal for the rest of this year, as many Chinese market participants have already suggested.

But the government could face an uphill task to reduce imports as import restrictions are already strict, some market participants said.

"How exactly tightened restrictions will be communicated to port authorities and the full extent of these restrictions still remain unknown," a Chinese trader said. "However, there are chances that all this could be executed by the first half of the year, given the current situation," the trader said.

"This came as domestic coal producers faced difficulties to executing their long-term contracts, but port restrictions at present are already quite tight so I wonder how much further they could go," a major China steel producer said. "Enforcement might be another major hurdle as importing of coal often involves various parties," the same producer added.

Four cfr China spot deals that lifted the premium low-volatile cfr index by $7.75/t today underscore this difficulty.

Customs authorities in Zhejiang province met with coal buyers to discuss the matter on 8 May. "The focus for Chinese customs this year is to ensure that steel producers still have access to imports when they need it, but clearance might be granted only on a case-by-case basis," an east China steel producer said. "Customs will also closely scrutinise imported coal and ensure that steel producers are not buying imports on behalf of traders, for instance."

China's government and industry associations such as CCTD have more often focused on thermal coal prices because power generation is an essential need for millions of people. This is the first time that the focus has instead been on coking coal, a steel-producing feedstock and so considered less essential. Coking coal accounts for around 15pc China's total coal production.

January-March coking coal imports rose by 80pc to 17.3mn t, the fastest start in at least six years, with the volume equal to about half the total year imports for 2015 and 2018. Seaborne supplies partly offset halted Mongolia imports.

April seaborne spot trades into China rose to a record high of 2.2mn t, up by 129pc from April 2019, Argus data show.

The Argus assessment for premium hard low-volatile coking coal delivered on a cfr China basis has fallen by 33.9pc to $116.30/t from early March to last week. Sellers have rushed to dump unneeded coal cargoes into China as ex-China steel demand has collapsed during the Covid-19 outbreak.

China's domestic coking coal typically prices at a premium to seaborne. But the gap has widened with top-tier Chinese met coal at around a 30pc premium to the cfr China premium low-volatile index.


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29/01/25

Australia’s BCC on track to meet coal sales target

Australia’s BCC on track to meet coal sales target

Sydney, 29 January (Argus) — Australian coal producer Bowen Coking Coal (BCC) is on track to meet its 1.6mn-1.9mn t sales guidance for the year to June 30, but low stockpiles and rail and port access could hinder the target. The Queensland coal producer managed record sales of 544,000t of coal in October-December , but cut its stockpiles to 127,000t on 31 December from 172,000t on 30 September. These stockpiles were the lowest end-of-quarter levels since BCC started producing in late 2022, and might need to be rebuilt in January-June, weighing on sales. Sales could also be impacted by increased vessel arrivals at Dalrymple Bay Coal Terminal, which BCC ships through, and increased wet weather forecast for February-April . BCC is negotiating to secure more port and rail capacity, although it has met its "near-term" requirements. The firm's managed production ran at a rate of about 3mn t/yr run of mine (ROM) in October-December, down from the 5mn t/yr ROM rate it targeted for 2024 in early 2023 , but at the top end of guidance of 2.7mn-3mn t/yr to 30 June. Wet weather in Queensland has seen the premium for top-grade coking coal decline relative to second-tier hard coking coal owing to lower availability, according to BCC. Argus last assessed the premium hard coking coal price at $185/t fob Australia on 27 January at a premium of $34.95/t to lower-grade hard coking coal. This premium is down from an average of $39.24/t for January and $37.52/t for October-December, but above the $24.59/t average in July-September. Non-premium hard coking coal prices fell to a $15/t premium to high-grade thermal coal in early September, before widening to nearly $40/t on 24 January. Thermal coal sales made up 42.5pc of BCC's sales in October-December, with the rest coking coal, up from 40pc in July-September. BCC has the option to swing some production between thermal and lower grades of coking coal but this takes time to implement. Argus last assessed the hard coking coal price at $151.05/t fob Australia on 27 January, down from $157.90/t on 30 December and at the lowest level since June 2021. Argus last assessed high-grade 6,000 kcal/kg NAR thermal coal at $113.85/t fob Newcastle on 24 January, down from $123.44/t on 27 December. By Jo Clarke Bowen Coking Coal (BCC) Oct-Dec '24 July-Sep '24 Oct-Dec '23 Jul-Dec '24 Jul-Dec '23 BCC managed production (kt) ROM 788.8 768.8 785.2 1,557.6 1,425.6 Saleable coal 482.4 443.5 478.7 925.9 1,023.8 BCC sales volumes (kt) Metallurgical coal 312.8 248.8 264.8 561.5 567.4 Thermal coal 231.1 166.0 238.4 397.1 492.4 Total 543.9 414.8 503.2 958.6 1,059.8 BCC's average realised price ($/t) Metallurgical coal 165.8 179.2 210.0 171.7 192.0 Thermal coal 88.5 93.4 100.3 138.1 144.7 Argus average prices ($/t fob Australia) Premium hard low-volatile coking coal 202.6 210.5 333.6 206.5 298.4 Hard coking coal 165.1 185.9 277.0 175.6 250.6 6,000 kcal/kg thermal coal 137.5 138.4 139.8 137.9 147.3 — BCC, Argus Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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CSX expects continued coal challenges in 2025


23/01/25
News
23/01/25

CSX expects continued coal challenges in 2025

Cheyenne, 23 January (Argus) — Eastern US railroad CSX is expecting coal market weakness to linger into this year, weighing on the company's overall volumes. A large part of the coal volume decline could come this quarter because of production issues at some mines, CSX executives said today. Later on in 2025, coal-fired power plant retirements may weigh on CSX's domestic coal volumes. The carrier did not give specific volume guidance for 2025. CSX hauled 82.7mn short tons (75mn metric tonnes) of coal in 2024, down by 3pc from 2023. The railroad's domestic coal shipments dropped by 14pc to 38.9mn st and offset a 9pc increase in shipments to export terminals, marking the first time in the company's history that more than half of CSX's coal carloads were headed to export terminals. In the fourth quarter, both CSX's domestic and export coal volumes were lower when compared with a year earlier. CSX loaded 9.6mn st of coal headed to domestic customers last quarter, down from 10.9mn st in the final three months of 2023. The railroad's export coal volumes dipped to 10.5mn st from 10.8mn st. CSX attributed the fourth quarter year-on-year declines to reduced production, including planned and unplanned outages at customer facilities. The company also "navigated the effects" of lower seaborne coal pricing and continued to encounter lower domestic demand, primarily from utility customers, CSX chief commercial officer Kevin Boone said. "More recently, we have seen colder winter weather reducing coal utility stockpiles", which could provide some opportunity for domestic utility coal inventory rebuilding in the short term, Boone said. But upcoming power plant retirements will hit CSX's domestic coal shipments, and production issues will drag on overall coal volumes in the first half of 2025. CSX did not name the mines experiencing production problems. CSX services Core Natural Resources' Leer South metallurgical coal mine in West Virginia, which was recently taken off line as the company works on and recovers from a fire that started on 13 January. CSX also expects lower seaborne coal prices to drag down the company's revenue in the first half of 2025. The railroad's fourth quarter coal revenue fell by 20pc to $499mn and full year 2024 revenue decreased by 10pc to $2.25bn. Average revenue per coal railcar in the fourth quarter decreased by 14pc to $2,788/car. In addition to decreased volumes and seaborne prices, CSX's fourth quarter coal revenue was negatively affected by disruptions from the aftermath of Hurricane Helene, which hit the US southeast at the end of September, and Hurricane Milton in early October. The storms also affected the company's overall fourth quarter revenue and service metrics. CSX's intermodal trip plan performance — which compares actual movements to the railroad's plans — averaged 84.9pc, compared with 94.7pc a year earlier. The company's carload movements were about 75.5pc of what it had planned, down from 84.7pc in the final three months of 2023. Still, CSX's overall railroad volume last quarter rose by 1pc from a year earlier, to 1.58mn carloads and intermodal units such as chemicals, minerals and intermodal shipments topped fourth quarter 2023 levels. CSX attributed the gains in chemicals shipments to increased volumes of plastics, crude oil, and natural gas liquids. The company's international intermodal volumes were supported by higher port volumes and "growth with key customers", while CSX's domestic intermodal shipments increased primarily because of growth in transcontinental shipments. CSX automotive shipments declined. Total CSX revenue for the quarter decreased by 4pc to $3.54bn because of lower fuel surcharges, and coal revenue outweighed gains in merchandise and intermodal volume growth. For all of 2024, CSX's volume was 2pc higher than in 2023, at 6.28mn carloads and intermodal units, while revenue dipped by 1pc to $14.5bn. CSX cycle times in 2025 are likely to be greater than they were last year, when Helene and Milton and the March collapse of the Francis Scott Key Bridge in Baltimore, Maryland, temporarily disrupted traffic. By Courtney Schlisserman Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Poland's JSW met coal mine fire halts operations


22/01/25
News
22/01/25

Poland's JSW met coal mine fire halts operations

Warsaw, 22 January (Argus) — A fire caused by methane gas ignition at Polish firm JSW's Szczyglowice coking coal mine today has halted longwall operations and left 16 miners injured. The fire occurred at a depth of 805m, JSW said. An investigation team has been set up to assess the accident and determine the future of the affected area, the firm added. Szczyglowice mine has an estimated 185.1mn t of coal reserves and is part of the Knurow-Szczyglowice mining complex, located south of Gliwice city. The mine produces both met coal and thermal coal. Last year approximately two-thirds of its output was met coal and the remainder thermal coal although JSW has been attempting to increase the share of met coal production. Fires and accidents are frequent at JSW mines, having operated at depths reaching 1,300m. Last year the company declared force majeure on coking coal production and slashed planned output by 850,000t after accidents at the Budryk and Pniowek mines in April 2024 and December 2023, respectively The Szczyglowice mine fire may complicate JSW's ambitions to restore its met coal production to 14.5mn t/yr by 2026 from 9.9mn t last year. Stocks of undelivered met coal at Polish coal mines have recovered from a 2024 low of less than 200,000t in August to 364,000t at the end of November last year, similar level as in November 2023, according to the most recent data from the Polish government's ARP mining research firm. By Tomasz Stepien Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Consol, Arch shareholders approve merger


09/01/25
News
09/01/25

Consol, Arch shareholders approve merger

Houston, 9 January (Argus) — US coal producers Consol Energy and Arch Resources' shareholders today approved the companies' plan to merge. With the shareholder approval taken care of, the coal mining companies expect to their merger to close on 14 January, becoming Core Natural Resources. Consol will own 55pc of the combined company and Arch will have the remaining stake. Consol and Arch have projected Core Natural Resources to have 12mn short tons/yr (10.9mn metric tonnes/yr) of metallurgical coal capacity and 25mn st/yr of high-calorific thermal coal capacity. The merged entity also will house Arch's Powder River basin (PRB) mines, which produced a combined 34.7mn st in the first nine months of 2024 and 62.8mn st in all of 2023, according to the US Mine Safety and Health Administration. Arch and Consol have not specified what they will do with the PRB assets. Arch chief executive officer Paul Lang said in November 2024 that plans for the company's PRB operations are a "tougher discussion", than for plans for its other assets. Arch executives in recent years have talked about shifting away from thermal coal sales, particularly for the PRB. The new entity will have access to two east coast shipping terminals — the Consol Marine Terminal in Baltimore, Maryland and the Dominion Terminal Associates facility, which Arch co-owns with Alpha Metallurgical Resources. Core Natural Resources also will be able to ship to US west coast and the Gulf of Mexico ports. The companies won shareholder approval despite recent stockholder concerns that prompted legal challenges following the announcement of the proposal in August 2024. Three lawsuits were filed against Consol and Arch, and the companies also received demand letters from counsel representing individual stockholders, Consol said in a recent US Securities and Exchange Commission (SEC) filing. The challenges alleged that the joint proxy statement issued by the coal producers contained "false and misleading" statements and omissions. Consol and Arch stated that these allegations were without merit, but on 3 January the companies submitted an 8-K filing with the SEC voluntarily amending the proxy statement "without admitting any liability or wrongdoing" to prevent any delays or adverse impacts to the merger's progress. By Anna Harmon Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Viewpoint: US utilities worry over railcar supply


02/01/25
News
02/01/25

Viewpoint: US utilities worry over railcar supply

Washington, 2 January (Argus) — US utilities are concerned that they may not have enough railcars to haul coal in the future as multiple power plants are seeking to remain in operation longer than expected. Power demand is forecast to rise in the coming years because of planned data centers in multiple parts of the country. Many data centers are expected to open before new generation, including natural gas, wind and solar-power units, go into service. A number of utilities want to avert the temporary power shortage by extending the life of coal-fired power plants beyond planned retirement dates. In response, demand is "poised to shift to a slight growth in the need for coal cars", according to railcar expert Richard Kloster, president of Integrity Rail Partners. Longer power plant lives as well as expectations of increased metallurgical coal exports are likely to provide demand for equipment. But the supply of railcars for coal has been slowly shrinking. No new railcars for the coal industry — primarily gondolas or open-top hoppers — have been built in nearly a decade. Utilities and leasing companies have had little interest in ordering new railcars for a shrinking sector. Many existing cars have also been scrapped, particularly during periods of low coal demand and high scrap prices during the last few years. There also are thousands of coal railcars in storage, but those do not really count towards demand, Kloster said. The cost of pulling those cars out of storage and making them service-ready is not necessarily cost effective, he said. About 21pc of North American coal cars were in storage at the beginning of August, up from 15pc in November 2022, according to Association of American Railroads data. In comparison, about 35pc of the coal car fleet was in storage at the start of July 2020, near the height of the Covid-19 pandemic. Possibilities of new construction There is a chance that "in the next 10 years, there will be coal cars built again", because many coal cars in the fleet are nearing 50 years of age, Kloster said. The retirement of many cars means that equipment must be pulled from storage or new units built, driving potential construction. Under Association of American Railroads (AAR) rules, railcars built after June 1974 can only be interchanged with other railroads for 50 years. After that, those cars are generally limited to operating on only one carrier. Some of those older cars may be retired early if they need repairs. Maintenance expenses could cause car owners to take units out of service. Utilities strategize Some utilities are already implementing plans to secure railcars, but others think taking additional steps will be unnecessary, according to railcar expert Darell Luther, chief executive of rail transportation firm Tealinc. The differing views are tied in part to whether utilities are regulated by states or merchant-owned, Luther said. Public utilities need to prove to regulators they can meet generating needs, including having enough coal and railcars. Privately owned operators have more flexibility in terms of contracting for coal and railcars. Several utility rail managers told Argus they do not see the need to take extra steps to secure railcars, confident that they already have plenty or can lease whatever they need in the future. But other utilities said they have taken steps to ensure they have coal cars in the future. Some utilities have purchased single or multiple cars as other generators sell them off. Others are increasingly leasing cars, with one utility saying that having more cars than needed is a cheap way of ensuring future supply. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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