Atlantic coking coal: Chinese appetite grows

Market: Coking coal, Metals
08/12/20

US coking coal prices have firmed further this week as Chinese demand continues to extend into 2021 with buyers seeking year-long supply deals with US mining firms.

The Argus fob daily assessment for low-volatile coking coal held steady at $127.50/t fob Hampton Roads today but rose by $2.50/t yesterday, driven by Chinese demand and supply limitations for December and January loadings.

The high-volatile A assessment was $127.50/t fob Hampton Roads today after rising by $2.50/t yesterday, as supplies for the first quarter tighten further and offers edge up as high as $130/t. The high-volatile B assessment stands at $112.50/t fob Hampton Roads with few US firms having spot availability.

Australian fob prices have inched up this week and more Australian spot deals were concluded today at $102-103.50/t for late-December to January loadings of Goonyella, Peak Downs and Peak Downs with the option to deliver Saraji. Some of these cargoes might be bound for a European mill that has been active throughout November in the Australian low-volatile spot market. But premium low-volatile coal availability from most other suppliers is tight at the moment, a trader said.

Brazilian interest in Australian coking coal is limited despite US low-volatile coal holding a $24.60/t premium over Australian low-volatile today. At least one mill is not in the market, having closed a tender for 450,000t of mid-volatile coal and 420,000t of low-volatile coal for 2021 delivery shortly after Australian producers stopped being able to sell cargoes to Chinese buyers.

Indian buyers are showing an interest in mid-volatile Australian coal but demand is limited with most buyers covered until February next year.

US producer Arch Resources has secured a 300,000t year-long supply deal for high-volatile A coal, possibly with a northeast China steel mill. While high-volatile coal is not typically shipped to China, coal supplied from the Leer mine in West Virginia with a CSR of above 65 — higher than most US high-volatile A coal — is expected to be blended with a low CSR domestic coal, market participants said.

A Chinese trader was heard to have secured a cargo of Pinnacle coal late last week but no further details were available. Another Chinese buyer is understood to have secured five cargoes of Pinnacle coal to be delivered next year.

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