Asia-Pacific coking coal: Fob trades at $260/t

Coking coal prices on a fob Australia basis jumped after an August Goonyella deal emerged higher on traders' position-taking, against a background of anticipated supply tightness.

The Argus Australian premium low-volatile (PLV) hard coking coal price rose by $22.60/t to $259.60/t on a fob basis, while the tier-two hard coking coal price rose by $18.50/t to $225.50/t fob Australia.

Trading returned to the first-tier fob Australia market today after more than a week of subdued activity. A major producer sold a 40,000t Goonyella cargo with 1-10 August laycan to a trading firm at $260/t fob Australia on the Globalcoal trading platform today.

The trade was in line with market expectations of tightening supply, providing a lift to coking coal prices. The suspension of operations at Anglo American's Grosvenor mine in Queensland has prompted a sharp change in market sentiment, sources noted. Sentiment had been bearish over the previous week, before taking a bullish turn when the news of the closure broke over the weekend, an India-based trader said.

Several sources said the increase was on the high side, as there has been limited change in recent market fundamentals to warrant such a rise. Recent events made it challenging to gauge where the market price should be, a Singapore-based trader said, preferring to adopt a wait-and-see approach towards near-term market direction.

But users in the region were largely sceptical on whether the uptrend can be sustained, suggesting that demand remained muted their end. "We don't have any urgent requirement at this point and will wait for an update from the miner before acting," an Asian steel mill source said. Several steel mill sources also pointed out that they have accounted for limited supply from the miner in August-September because of a scheduled long wall move. At least three steel mill sources expected the miner to have sufficient inventory to meet the commitments for scheduled July-loading cargoes.

A bid for a 75,000t cargo of premium mid-volatile hard coking coal for 1-10 September was made at $255/t fob Australia on Globalcoal today, increasing from $250/t fob earlier in the session. It did not attract a counteroffer.

In the pulverised coal injection (PCI) segment, a 40,000t cargo of Australian South Walker Creek PCI for 27 July-5 August loading was sold at $195/t fob Australia to a Brazilian steel mill on 1 July after the assessment timestamp of 17:30 Singapore time.

Premium hard coking coal prices to India rose by $22.25/t to $275.35/t on a cfr basis, while second-tier prices rose by $18.60/t to $241.70/t cfr east coast India.

The PLV hard coking coal price to China was unchanged at $247/t on a cfr basis today, while the second-tier price was flat at $217/t cfr north China.

Market participants noted that the trade seemed to have minimal impact on the Chinese market. An international trader suggested that domestic coking coal prices held steady because of Russian and Mongolian coal availability. The link between the seaborne and domestic market has been disjointed for a while now, another trading source said, even though fob prices are expected to climb because of tightening seaborne supply. "At the current fob Australia price levels, it is difficult for Chinese buyers to consider buying imported coal since other origins of seaborne prime coals are also expected to increase at a relativity to the fob Australia price," a Chinese buyer said.

Fob Australia rationale

The fob Australia PLV index was based on an average of the day's deals and surveys, both weighted at 50pc in the index calculation.

A 40,000t cargo of Goonyella with an August laycan traded at $260/t fob Australia and was normalised flat. The market survey was at $255-260/t and averaged $259.17/t.