COKING COAL DAILY: Buying interest continues to support fob market

Seaborne coking coal prices were largely stable in cfr market on Friday June 11 amid low trading activity in North American coking coal cargoes. The fob market rose because of continuous buying interest for July-laycan cargoes from Australia, market sources said.

Prices for seaborne pulverized coal injection (PCI) surged upward in the cfr market in the week to June 11 due to continuing supply tightness for Russian PCI. The fob market also went up following a rally in the coking coal fob market and PCI cfr China market.

Fastmarkets indices
Premium hard coking coal, fob DBCT: $169.22 per tonne, up by $0.54 per tonne
Premium hard coking coal, cfr Jingtang: $283.29 per tonne, down by $0.25 per tonne
Hard coking coal, fob DBCT: $151.93 per tonne, up by $6.50 per tonne
Hard coking coal, cfr Jingtang: $250.25 per tonne, up by $0.63 per tonne

Coking coal market
In China, market sentiment for seaborne coking coal remained stable and positive over the week, with offeris flat at an the elevated level of $295 per tonne cfr China for US premium low-volatility hard coking coal.

Some traders kept to the market sidelines because there was no opportunity for speculation amid the high offers and uncertain demand. No tender information for seaborne coking coal was released from Chinese steel mills this week.

A few market participants turned to Russian coking coal at a much lower price than cargoes from North America.

A 20,000-tonne of Russia-origin semi-hard K10 material was heard concluded at $194 per tonne cfr China on June 11, with a laycan date in July.

Meanwhile, major coal mines in northern China’s Henan province have shut down or limited production after two serious mining accidents in early June, supporting domestic coking coal prices.

“Local mills and coke producers have turned to buying cargoes from other provinces. It would be difficult for those coal mines to resume production before July 1,” an industry source said.

In the fob coking coal market, most buyers adopted a wait-and-see attitude to digest previous price rises for Australian coking coal. Buying interest was seen on Friday with bids on a coal platform flat at $165 per tonne fob Australia for PMV, while the offer was about $178 per tonne fob Australia. The bid level for PLV was about $170.50-171.00 per tonne fob Australia on the same day.

A Singapore-based trader noticed that the bid level for PLV had gradually inched higher than for PMV after most Indian buyers left the spot market due to Covid-19 lockdowns or steelmaking reductions.

In the rally for premium hard coking coal (PHCC), a 90,000-tonne of hard coking coal for July loading was sold to South America at $152 per tonne fob Australia on June 11, market sources said.

“The price is much higher than expected,” a Vietnam-based trader said. “[It is] a little bit crazy - it just followed the PHCC trend upward.”

PCI market
In the PCI market in China, offers for Russian low-volatility and high-quality PCI cargoes remained at elevated levels over the week to June 11, market sources said.

A 40,000-tonne of Russia mid-vol PCI (10 Ash, 13-15 VM) was traded at $168.50 per tonne cfr China on June 10, with a July laycan, market sources said.

Another July-laycan cargo of Russia low-vol PCI (VM<5%) was offered at $175 per tonne cfr China but no firm bids were received.

Some market sources said that Chinese demand for Russian PCI was strong while supply was relatively tight, because major miners had shipped more thermal coal than other coals to gain higher margins.

“We heard some cargoes [of PCI] with May laycan are still on the way to the port for shipment in Russia, and it takes even more time to get the cargoes to the factory, [but] there is still some buying interest,” a Beijing-based trader said.

Fastmarkets’ index for PCI, low-vol, cfr Jingtang, was $171.63 per dry metric tonne on June 11, up by $8.61 per tonne on a weekly basis.

The fob PCI market increased in the week to June 11 following the overall rise in the coking coal market yet trading activity for Australian PCI was still poor, market sources said.

No deals were reported this week.

A few international traders focused on reselling Russian PCI to the Chinese market due to the appealing prices and margins, which also supported Australian PCI fob prices, several market participants said.

“Some buyers and traders may turn to Australian PCI as a replacement after seeing the flying Russian PCI prices in China,” an industry source from Southeast Asia said.

Russian PCI was offered at $150-155 per tonne fob Russia this week, market sources added.

Market views on Australian PCI prices were in the range of $130-138 per tonne fob Australia this week due to the overall rally in the fob coking coal market.

“PHCC prices moved up,” an India-based steel mill source said. “Some buyers can use more PCI in their steelmaking processes to reduce the consumption of metallurgical coke.”

Fastmarkets’ index for PCI, low-vol, fob DBCT, was $135.93 per dmt on June 11, up by $22.64 per tonne on a weekly basis.

Dalian Commodity Exchange
The most-traded September coking coal futures contract on the exchange closed at 1,982.50 yuan ($310.43) per tonne on June 11, up by 117.50 yuan per tonne day on day.

The most-traded September coke contract closed at 2,721.50 yuan per tonne on June 11, up by 143.50 yuan per tonne day on day.

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