COKING COAL DAILY: China’s strong market supports fob Australia coking coal

Seaborne coking coal prices maintained their upward trend in the cfr China market following a strong domestic coking coal market and prices inched higher in the fob market on Friday August 20 amid necessary restocking demand.

Prices for seaborne pulverized coal injection (PCI) increased in both the cfr China and fob Australia markets in the week to August 20 due to supply tightness in both markets, sources told Fastmarkets.

Fastmarkets indices
Premium hard coking coal, cfr Jingtang: $368.49 per tonne, up $2.08 per tonne
Hard coking coal, cfr Jingtang
: $326.01 per tonne, up $2.18 per tonne
Premium hard coking coal, fob DBCT: $226.86 per tonne, up $1.79 per tonne
Hard coking coal, fob DBCT: $198.91 per tonne, up $2 per tonne

Coking coal
The seaborne coking coal market continued its upward trend on Friday following the strong domestic coking coal market, which was supported by a tight supply of material.

Coal mines in China’s Shanxi province did not ramp up supply as expected in early July because of frequent safety and environment protection checks. Some mines remain closed due to mining accidents in the first quarter of 2021, sources said.

“There were some new mining accidents ex-Shanxi province [in China] recently, and it makes miners more conservative in increasing output, thus coking coal prices are still supported by the tight supply,” an industry analyst from Hangzhou said.

Major steel mills in north China’s Hebei province have agreed to increase the domestic coke price by 120 yuan ($18.47) per tonne from August 20, marking the fifth round of price increases - which total 600 yuan per tonne - in August.

“Steel prices increased due to the production cut and mills still have decent margins to accept the high coke price,” a trader source from Shanghai said.

China’s strong cfr prices for coking coal from North America also supported the fob Australia coking coal, sources said.

The bids for premium low-volatility hard coking coal from end users were around $225 per tonne fob Australia, in line with the latest transaction price, while offers stayed $3 higher than bids, sources said.

“There is still necessary demand for September and October-laycan coking coal from Asia,” a coke producer from India said.

Another mill source from Vietnam mentioned that cfr China coking coal prices rose sharply in the week and boosted coking coal market sentiment in Australia in the fob spot market.

PCI
The seaborne PCI price in China in the week to August 20 increased sharply due to the strong coking coal market as well as limited domestic supply.

A cargo of Russia-origin low-volatility PCI was traded at about $195 per tonne cfr China on August 16, and the same brand was resold at $200 per tonne cfr China late in the week, sources said.

Another 85,000-tonne volume of Canadian Conuma PCI was traded at $173-175 per tonne fob Canada during the week, with early October laycan.

The offers for high-quality Russian PCI were above $200 per tonne cfr China on August 20 yet no new buying activities were reported.

A Shanghai-based seller source noted that the supply tightness of domestic PCI supported the high transaction price of seaborne PCI.

Fastmarkets’ calculation of the index for PCI, low-vol, cfr Jingtang was $202.25 per dry metric tonne on August 20, up by $13.49 per tonne on a weekly basis.

The fob Australia PCI price inched up in the week to August 20 amid continuous supply tightness, sources said.

A mill source from Asia said that tradable resources of Australia PCI are very limited in the spot market and that they adopted a wait-and-see attitude for the PCI transaction price due to the strong coking coal market.

Fastmarkets’ calculation of the index for PCI, low-vol, fob DBCT was $161.86 per dmt on August 20, up by $4.72 per tonne on a weekly basis.

Dalian Commodity Exchange
The most-traded January coking coal futures contract closed at 2,238 yuan ($344.54) per tonne on August 20, down by 49 yuan per tonne day on day.

The most-traded September coke contract closed at 2,830.50 yuan per tonne on August 20, down by 44.50 yuan per tonne day on day.

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