COKING COAL DAILY: Speculative activity up amid supply reduction concerns in fob market
Seaborne coking coal prices stayed largely stable in the cfr market and inched up in the fob market on Friday June 4, with major mills in the cfr market done restocking premium cargoes while market sentiment in the fob market turned bullish on market expectations of a facilities overhaul in July for major Australian miners, Fastmarkets heard.
Prices for seaborne pulverized coal injection (PCI) increased in both the cfr and fob markets in the week to June 4 amid tight supply from Russia and Australia, market participants said.
Premium hard coking coal, fob DBCT: $165.77 per tonne, up $3 per tonne
Premium hard coking coal, cfr Jingtang: $282.04 per tonne, flat
Hard coking coal, fob DBCT: $138.93 per tonne, up $3.99 per tonne
Hard coking coal, cfr Jingtang: $248.02 per tonne, down $0.75 per tonne
Coking coal market
In China, imported premium hard coking coal with July laycan was still very limited this week while market sources reported more second-tier American coal in the market.
“The quality of second-tier American coal is similar to domestic semi-soft or fat coal so there’s not much buying interest for that because inland steel mills and coke plants can find domestic replacements,” a Tangshan-based coke producer said.
Other market participants think the market would stay stable in the short term after major mills finished procurement early this week and there were no open offers for premium cargoes with firm laycans from traders.
In the fob coking coal market, market sentiment stayed positive with bids on the Global coal platform up to $165 per tonne fob Australia for premium hard coking coal while offers were at about $175 per tonne fob Australia, market sources said.
One Singapore-based trader thinks the major bidding interest for Australian coking coal is from speculative traders because most end-users in Southeast Asia stood on the market sidelines this week.
There is hearsay that a major Australian coal miner might conduct a facility overhaul in July after the end of fiscal year, which would tighten supply in future, a few market sources said.
One coke producer in India said premium hard coking coal cargoes from Australia with July laycan are limited and end-users with necessary procurement demand would show firm buying interest.
Another mill source in Vietnam, however, adopted a wait-and-see attitude amid the increasing offer level.
“The seller is trying to push prices that are going up but at the moment, we won’t buy with this price,” the mill source from Vietnam said.
For the PCI market in China, the offer level for Russia low-volatility and high-quality PCI cargoes increased over the week due to the limited railway transportation in Russia and fast-growing thermal coal prices, market sources said.
“Some Russia miners are shipping more thermal coal with the current railway capacity because they can get more profit selling thermal coal than PCI to China,” a Russia coal trader said.
Other market sources said factories in Japan had recently procured more Russian PCI, compared to last month, to use instead of thermal coal in production.
“We didn’t see much tradable resources of high-quality Russia PCI this week,” a Beijing-based trader said.
Offers heard for Russia PCI (VM<5%) were at about $170 per tonne cfr China, while bids were about $150-160 per tonne cfr China, market sources said.
Another trader source from south China, however, said buying interest for high-volatility and low-quality Russia PCI was low because these cargoes are not cheap enough compared with domestic cargoes.
“For high-vol PCI, buyers need to pay a higher import tax so they’ll calculate overall costs compared with domestic cargoes,” the same trader said.
Fastmarkets’ index for PCI, low-vol, cfr Jingtang was $163.02 per dry metric tonne (dmt) on June 4, up by $1.44 per tonne on a weekly basis.
The fob PCI market increased in the week to June 4 on the fast-growing coking coal market and tight tradable resources from Australia over the week, market sources said.
The offer level for Australia PCI cargoes dropped to about $112 per tonne late in the week from $116 per tonne earlier in the week, yet this was still higher than the level reached in the previous week.
There were no deals reported to Fastmarkets this week, although.
Fastmarkets’ index for PCI, low-vol, fob DBCT was $113.29 per dmt on June 4, up by $4.04 per tonne on a weekly basis.
Dalian Commodity Exchange
The most-traded September coking coal futures contract closed at 1,850 yuan ($289.24) per tonne on Friday, down by 28.50 yuan per tonne.
The most-traded September coke contract closed at 2,536 yuan per tonne, down by 158.50 yuan per tonne.
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