Prices for seaborne pulverized coal injection (PCI) material continued to increase in the cfr market in the week to May 14, due to persistent supply tightness and relatively good demand, but remained largely stable in the fob market on a recovery in supply.
Premium hard coking coal, fob DBCT: $121.21 per tonne, up $4.12 per tonne
Premium hard coking coal, cfr Jingtang: $269.78 per tonne, up $21.52 per tonne
Hard coking coal, fob DBCT: $105.71 per tonne, down $1.00 per tonne
Hard coking coal, cfr Jingtang: $227.44 per tonne, up $6.66 per tonne
Coking coal market
In the cfr coking coal market, most Chinese market participants adopted a wait-and-see stance on Friday after the huge decrease in steelmaking industry futures prices on Thursday and Friday, including for rebar, iron ore, coking coal and coke futures prices.
The Chinese government met major steel mills on May 13-14 to survey “overheated steel prices” and ordered the market to standardize based on actual market supply and demand conditions, market sources said.
“The notice and meetings do impact market sentiment; now traders won’t be as active as previous days in procuring seaborne coking coal at high prices,” a trader source from Shanghai said.
But some market participants said they believe seaborne coking coal prices will stay strong even on the back of the falling ferrous market prices because of supply tightness, necessary demand and increasing domestic coke prices.
“If the coking coal production in Shanxi increased, market sentiment may cool down…Now high-quality domestic coking coal from Shanxi is equivalent to about $260 per tonne and the tradable resources are very low,” a trader source from Beijing said.
American premium low-volatility coking coal Oak Grove was traded on May 12 at $270 cfr China, with a laycan in June, along with another vessel with a laycan in July at the same price and brand, various market sources confirmed on Friday.
Meanwhile, the continuously growing domestic metallurgical coke price could support domestic coking coal prices and the current steel production curbing policy in north China would lead to a preference for high-quality seaborne cargoes, market sources said.
“To maximize high output with limited operation rates, mills prefer high-quality raw materials to sustain production,” a Tangshan-based trader said.
In the fob coking coal market, market sentiment turned positive on the back of vigorous growth in the Chinese steel market. Chinese buyers are accepting ex-Australia coking coal amid good steel margins, while buyers from other markets have shown buying interest for Australia coking coal, market sources said.
“Steel margins and prices [in China] increased so much previously and this supported global steel prices and most raw materials,” a Singapore-based trader said.
Another market source from India said demand for steel is good globally amid a recovery in the steel industry, which could support the raw material procurement prices, such as iron ore and coking coal.
Yet one mill source from Vietnam said coking coal prices in the fob market may inch down because the overall slip in the futures and spot market in China on Friday has cooled market sentiment.
“We’re not in a hurry to procure today, and the offer level is high for us,” the same source said.
A 750,000-tonne cargo of premium low-volatility hard coking coal in the HCCA branded segment traded at $125 per tonne fob Australia on May 14 on the Globalcoal platform, various market sources said.
For the PCI market in China, falling steel supply chain prices including rebar, iron ore, coking coal and coke futures have not yet negatively affected demand and transaction prices of Russian PCI.
Early this week, bids for low-volatility Russian PCI were about $155 per tonne cfr China and inched down to about $140-145 per tonne cfr China by the end of the week, although this was still higher than in the previous week.
“Currently, the supply of imported low-vol and mid-vol is still very tight and demand is good…and the high coke prices also support prices of PCI cargoes because they’re one of alternative choices [for coke in steelmaking production],” a mill source from north China said.
A deal of Russia mid-vol PCI was concluded at about $140 per tonne cfr China in early this week, loading at the end of May, with VM 20%, ASH 10%, GCV 7350.
Another deal of Russian low-vol PCI was concluded at $165 cfr China on May 13, market sources confirmed on Friday.
Fastmarkets’ index for PCI, low-vol, cfr Jingtang, was $154.12 per dry metric tonne on May 14, up by $15.08 per tonne on a weekly basis.
“Some traders take PCI cargoes at high prices from miners because they are very bullish on the future market, but it takes time for end users to accept,” a Shanghai-based trader said.
The fob PCI market remained largely stable in the week to May 14 because there were no significant changes on the overall supply and demand structure, market source said.
“Demand [for PCI] is weak, but the market is supported by higher thermal coal prices,” an India-based trader said.
Fastmarkets’ index for PCI, low-vol, fob DBCT, was $107.22 per dmt on May 14, up by $0.76 per tonne on a weekly basis.
Dalian Commodity Exchange
The most-traded September coking coal futures contract closed at 1,922 yuan ($297.77) per tonne on Friday, down by 66 yuan per tonne.
The most-traded September coke contract closed at 2,614.50 yuan per tonne, down by 114.50 yuan per tonne.
Seaborne coking coal prices surged up in both the cfr and fob markets on Friday May 14 due to increased buying interest and positive market sentiment in both markets.