Atlantic coking coal: Mood bleak with 1Q in focus

: Coking coal, Metals
19/10/23

US export coking coal prices edged down today as negative signals from the steel market and the stalled Asia-Pacific price recovery weighed on negotiations.

The Argus daily fob Hampton Roads index for low-volatile coking coal is at $140.50/t today, down by $1/t from yesterday. The daily high-volatile type A (HVA) index edged down 50¢/t to $147.50/t fob Hampton Roads, while the high-volatile type B (HVB) coking coal down by $1.50/t at $134.50/t fob.

A trader said they have some spot US high-volatile cargoes still available for the fourth quarter and buyers are pushing for steep discounts to indexes, noting European buy-side indications for some off-specification HVB coals in the high-120s fob Hampton Roads.

No new interest has been noted out of Brazil in the past week. Some traders note that demand for US coking coal from India has picked up again following a prolonged absence during and after the monsoon, but here too they face negative sentiment and a strong push for discounts.

For the most part, attention has now switched to first quarter cargoes and full-year 2020 supply deals, and various negotiations are expected to progress over the next month as the Autumn conference season gets underway. The prevailing mood at an industry event in Lisbon this week was one of caution, with consumers under severe pressure to keep raw materials costs down because of the beleaguered steel market, and sources on all sides attempting to gauge the Chinese market — in particular after a few weeks of wide-ranging price indications and brand valuations in Asian markets.

Some sell-side market participants in the Atlantic region expected Asia-Pacific benchmarks to rise further this month as Chinese buyers returned to book cargoes ahead of their import quota renewal at the start of January. As it is, the Argus daily fob Australia index for premium hard low-volatile coking coal is now struggling to push much above the key $150/t fob threshold below which many coking coal producers outside Australia come under significant financial pressure.

An Atlantic coking coal producer said it remains optimistic in the longer-term owing to the cyclical nature of the market, and is continuing to invest in its operations as planned. But that commitment to its capital expenditure programme is intensifying pressure to protect its margins now despite challenging seaborne prices and worrying conditions facing its European customers.

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