COKING COAL DAILY: Coronavirus spread grips ex-China markets, India in focus

Seaborne coking coal prices retreated on Monday March 23, with fears of a global economic downturn taking hold due to the spread of the novel coronavirus (2019-nCoV), even though sentiment among Chinese participants was starting to become more optimistic.

Fastmarkets Indices
Premium hard coking coal, fob DBCT: $159.43 per tonne, down $1.22 per tonne
Premium hard coking coal, cfr Jingtang: $167.48 per tonne, down $4.35 per tonne
Hard coking coal, fob DBCT: $142.51 per tonne, down $2 per tonne
Hard coking coal, cfr Jingtang: $156 per tonne, unchanged

An offer was heard for an 80,000-tonne May-laycan cargo of premium low-vol hard coking coal at $171 per tonne cfr China, with an option to replace the brand with another premium low-vol cargo at $170 per tonne cfr China, a source told Fastmarkets.

A buyer source from India said that seaborne coking coal prices would fall in the coming weeks because demand in India was expected to be weak with shutdowns taking place in several states in a bid to contain the spread of 2019-nCoV.

“Many automobile plants had been shut down while ports and most steel mills are still operating,” he added.

A trader source from India said the economic shock of the global spread of 2019-nCoV was expected to hit India’s steel sector soon, adding that coking coal imports would be affected “for sure.”

At least one major steel producer in the country has already taken the decision to shut down its blast furnace because of 2019-nCoV and the expected impact on downstream demand, Fastmarkets understands.

The authorities in India have announced the complete shutdown of 75 districts in 22 states and union territories across the country until March 31, with the country reporting more than 400 confirmed 2019-nCoV infections at the time of publication.

Meanwhile, the main coking coal production hub of Queensland, Australia, will close its borders from Wednesday March 25 to prevent the spread of 2019-nCoV, the state announced on Monday.

However, Australia’s main rail freight operator Aurizon confirmed that its Central Queensland Coal Network (CQCN) “continues to deliver services to our coal customers.”

CQCN is a regionally-based operation that does not cross state borders and Aurizon said that train crews and infrastructure employees primarily live and work in the regional communities in which the business operates.

“We are working closely with coal supply chain participants in our daily operations and also with respect to business contingency planning in response to [2019-nCoV],” Aurizon said.

Last week, the Queensland Resources Council highlighted that the country’s cabinet had announced that mine sites as essential activities, with the Queensland government also reiterating the importance of the sector, highlighting that despite the current conditions it was an “essential service” to Queensland.

US-based metallurgical coal miner Corsa Coal, meanwhile, said late on Friday March 20 that the company’s physical business locations in the state of Pennsylvania were no longer required to close under the March 19, 2020 order of the governor. The order “requires all non-life-sustaining businesses in Pennsylvania to close their physical locations for an indefinite period in connection with [2019-nCoV].”

However, the miner said: “Updated business guidance in connection with the order includes coal mining and support activities for mining as life-sustaining businesses and, as a result of this development, Corsa has recommenced operations at its mines and preparation plants in Pennsylvania.”

A trader source from China said that Chinese demand for seaborne coking coal would increase in the second quarter, when more manufacturing companies start to return to normal operations.

“But it is unclear whether the customs restrictions will be loosened,” the source said. “If it continues to be tight, we traders will be faced with purchasing issues.”

According to a survey conducted in late February by the China Enterprise Confederation, about 97.08% of the top-500 enterprizes in China’s manufacturing industry had resumed production, with 83.72% of workers in ferrous metallurgy and 81.36% of worker in the petrochemicals and coke-making industries getting back to work.

A Singapore-based trader source agreed that Chinese demand for seaborne coking coal would rise in the second quarter, although he was pessimistic about demand outlook at other major economies.

He said that with Mongolia expected to resume coal exports from April 1 and Anglo American expected to resume its Moranbah North mine operations in Queensland, in June, the supplies would be sufficient.

Another Singapore trader source said that demand for seaborne coking coal would fall in the second quarter because of steel mill shutdowns in Europe.

Dalian Commodity Exchange
The most-traded May coking coal contract closed at 1,243.50 yuan ($174.78) per tonne on Monday, down by 11 yuan per tonne.

The most-traded May coke futures contract closed at 1,765 yuan per tonne, down by 21 yuan per tonne day on day.