Atlantic coking coal: Signs of interest emerge

US coking coal prices held steady today on early signs of buying interest returning in Europe and stronger demand in Asia.

There is little to no European spot activity this week but participants remain hopeful that easing lockdown restrictions and falling Covid-19 infection rates and deaths in some countries point to the possibility of spot demand returning as soon as May. A spate of buying in China in a tight Asia-Pacific market has also supported prices but it is still unclear if this demand is sustainable in the longer term.

The Argus daily assessment for fob Hampton Roads low-volatility coking coal is flat on the day at $127/t today, but down by $1.50/t from a week ago. The high-volatility type A and high-volatility type B prices remained stable at $127/t fob Hampton Roads and $128/t fob Hampton Roads respectively.

While prospects of a swift recovery for Europe's steel industry remain uncertain, a US mining firm said mills in Italy, Germany and Turkey have requested seven-day advancements of laycans, while a mill in Brazil was heard to advance the laycan of a cargo but slightly reduce the volume. But most adjustments to shipments have been reductions or delays. One mining firm said every customer had made some form of adjustment, although these varied widely. A Europe-based trader held the view that blast furnace recovery will be slow and cautious, raising little risk of a raw materials shortage. But he added that "mills are hesitant to postpone cargoes and unwilling to cancel, they want to keep their suppliers prepared at the moment".

"German mills might bounce back earlier as they seem to have a decent grip," one miner said.

Italian steel service centres restarted late last week but actual steel demand is yet to appear and any requirement is only coming from essential sectors and on a hand-to-mouth basis. But there are expectations that the automotive sector in Italy may resume as soon as May.

Some market participants are less optimistic and do not expect to see any spot interest from a major European steelmaker until June at least.

One market participant said Chinese buyers had been "very active" in the past week, which indicates support for prices in Asia, which have otherwise been slipping. US and Russian sellers now depend heavily on China for spot sales, and a number of US mining firms have made sales in the past few days. But "Australian mines are not going to volunteer any output cuts, and there are probably even more US cuts down the road", one miner said. A significant number of US mines have halted or reduced production in the last couple of weeks. Consol Energy resumed output at its Bailey mine in Pennsylvania yesterday but closed production at the nearby Enlow Fork mine because of "weak coal demand" and the general economic slowdown. The company did not say when it might reopen Enlow Fork.

Colombian mid-volatile material was assessed at $114.75/t yesterday, down by $2.55/t on the week. Despite quarantine restrictions affecting some mining firms in Colombia, there is some availability on the market, with mid-volatile material heard to be offered into the Asian market for May-June shipment.

Freight rates in the Atlantic have remained under pressure amid strong availability and a lack of demand for coal shipments. The US east coast to Rotterdam Panamax rate is assessed at $6.50/t, the lowest for the year to date and down by 25¢/t from a week ago.