US low-volatile coking coal prices received another boost from strong Chinese demand as miners and suppliers seeking to wrap up deals ahead of the holiday season achieved new highs in China cfr deals.
The Argus fob daily assessment for low-volatile coking coal rose by $4.50/t to $138.50/t fob Hampton Roads today, driven by continued tightness in the low-volatile segment in the Atlantic and strength in Chinese demand. The first-tier prices to China rose by $8.50 to $188.75/t on a cfr basis following the sale of a Panamax cargo of US hard coking coal Blue Creek No.7 heard at $190/t cfr China for loading between late January and early February.
The high-vol A assessment was unchanged at $128.50/t fob Hampton Roads today, with transactions yet to cross the $130/t mark that some suppliers are offering. The high-vol B assessment was flat at $116/t today but earlier tightness appears to be easing, with February cargoes being offered.
With Chinese demand for ex-Australia coal expected to remain firm for the first half of 2021, European mills are receiving more offers for resales of Australian cargoes or have been approached by traders seeking to swap their US low-vol cargoes for Australian coals.
A European mill received an offer from a trader for a February-loading high-vol B cargo this week at $115/t fob Hampton Roads. But other market participants noted that offers for high-vol B in the first quarter range from $110-120/t fob depending on quality. But another buyer in Europe questioned the need to pay these levels for the grade, particularly as Australian premium low-vol coals continue to be offered more than $10/t lower.
A Brazilian mill issued a tender this week for 100,000t of high-vol A and 100,000t of high-vol B, to be delivered between April 2021 and March 2022. Arch Resource's recent contract to ship 300,000t of high-vol A to a Chinese buyer in 2021 has caused some concern among Brazilian mills which rely on US high-vol coals. The rising number of new Covid-19 cases in Brazil since early November has no doubt worried some mills. Brazilian steel producers are still finding strong domestic demand, especially from the construction industry. But there are fears that this demand will be reduced, as the Brazilian government intends to end emergency stimulus measures on December 31.
A Europe-based trader is in talks with a buyer to supply a cargo of mid-volatile Colombian coking coal at $116/t fob Colombia for loading in the first quarter. Heavier rain than usual in November and resulting mudslides have disrupted transportation on dirt roads from mines to coke plants and ports. Supply problems as well as strong demand for coke have pushed Colombian coking coal prices up by $5-10/t in the last two weeks, said another trader.
