Bearish sentiment persists in Asian seaborne met coal spot market

Bearish sentiment persisted in the Asian seaborne metallurgical coal market on Tuesday June 24, as industry participants saw no reason for prices to come back up.

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Steel First’s premium hard coking coal index for material sold on a cfr Jingtang basis was calculated at $120.15 per tonne, down by $0.56 per tonne on the day.

The cfr Jingtang hard coking coal index was down by $0.79 to $107.63 per tonne.

The fob Australia premium hard coking coal index drifted $0.07 lower to $114.42 per tonne, while the fob Australia hard coking coal index went up by $0.22 to $102.21 per tonne.

“We have a lot of inventory and are still in the process of decreasing stock levels. We haven’t been in the market for almost two months and I don’t think we’re going back there any time soon,” a mill source told Steel First.

“My customers have no buying interest at all. The market has been quiet and I can’t find any factors that could potentially support it,” a sell-side trading source said.

Indicative bids for top Australian brands were heard about $120 per tonne cfr China while those for second-tier hard coking coal were at the low to middle $100s per tonne cfr.

Separately, Chinese customs on Tuesday released data showing a 9.5% year-on-year decline and a 9.1% month-on-month drop in coking coal imports in May, to 5.88 million tonnes.

China imported a total of 25.32 million tonnes of the steelmaking raw material over the first five months of 2014, down by 17.3% on the year, according to the data.

In Japan, quarterly benchmark negotiations continued on Tuesday with the settlement widely expected at $120-122 per tonne fob Australia.

The most-traded September coking coal futures contract on the Dalian Commodity Exchange closed at 806 yuan ($130.74) per tonne on Tuesday, down from Monday’s close of 809 yuan ($131.23) per tonne.

The most-traded September coke contract closed slightly higher at 1,142 yuan ($185.25) per tonne, compared with the previous day’s close of 1,140 yuan ($184.92) per tonne.

The yuan prices are the equivalent of cfr prices plus 17% VAT and port charges of about 35 yuan ($6) per tonne.