COKING COAL DAILY: Tight domestic and seaborne supply support cfr prices

Seaborne coking coal prices were firm in the cfr market on Friday July 16 despite quiet trading. Offers for September loaded cargoes rose but the fob coking coal market also remained stable, sources said.

Prices for seaborne pulverized coal injection (PCI) inched up in the cfr market in the week to July 16 due to tight supply for high quality resources from Russia. The fob market continued to increase due to the strong coking coal and thermal market, sources said.

Fastmarkets indices
Premium hard coking coal, fob DBCT: $210.65 per tonne, up $0.50 per tonne
Premium hard coking coal, cfr Jingtang: $308.94 per tonne, up $1.31 per tonne
Hard coking coal, fob DBCT: $176.67 per tonne, up $1.75 per tonne
Hard coking coal, cfr Jingtang: $267.11 per tonne, unchanged

Coking coal market
The seaborne coking coal market in China held firm despite cooling buying activity. Some market participants said supply tightness in both the domestic and seaborne coking coal markets would continue, with some provinces in China prioritizing the “thermal coal supply first in the hot summer”.

Offer for United States-origin premium low-volatility (PLV) hard coking coal remained unchanged at $312 per tonne cfr China, but no firm bids were reported.

Coking coal cargoes at the second-tier segment from the US were offered from $270-280 per tonne cfr China, sources said.

“Suppliers are standing firm on their offers, but they are showing more flexibility when it comes to sealing a deal with combo cargoes,” a Shanghai-based trader said.

A few market sources noted buying interest for imported low-sulphur PLV based on mills’ production, which supported market sentiment, but demand for the second-tier segment cargoes is lacking.

“End-users have rarely asked for second-tier segment cargoes from north America recently, because offers are much higher than domestic cargoes [prices] and mills could find similar cargoes from domestic coal mines,” a back-to-back trader source from north China said.

Multiple buyers are looking to buy Russian semi-hard coking coal because the material is more cost-effective than other US-origin coals when used as the sub-raw material in the coke making process, sources said.

The fob coking coal market was quiet over the week, with buying activity slow.

The offer for Australia premium hard coking coal with September laycan increased to $220 per tonne fob Australia in the Global Coal platform, sources said.

High offers for September-loaded coking coal provided support to prices for July and August laycan cargoes, a mill source from India said.

“Both supply and demand for August-loaded cargoes seem weak because their prices would be higher than September laycan cargoes,” the source said.

PCI market
The PCI market in China in the week to July 16 stayed stable amid supply uncertainty, sources said.

Offers for Russia PCI with low-volatility and high-grindability stayed at $170-180 per tonne cfr China, and bids were $160 per tonne cfr China.

Other low-volatility PCI from Russia was offered at $160 per tonne cfr China with August laycan.

A 30,000-tonne of low-vol and low-grindability PCI from Russia was traded at $158 per tonne cfr China early in the week.

There is some procurement demand from south China but the availability is limited, sources said.

The supply of PCI from Russia may be limited for July and August laycan cargoes due to limited local railway capacity, sources said, particularly because of high margins and buying interest for thermal coal exports.

Fastmarkets’ calculation of the index for PCI, low-vol, cfr Jingtang was $170.66 per dry metric tonne on July 16, up by $1.88 per tonne on a weekly basis.

The fob PCI market remained firm amid the strong coking coal and thermal coal market in the week to July 16.

Market participants struggles to procure Australia PCI in the week.

“Most cargoes are sent to meet long-term clients - there are few spot cargoes,” an industry source said.

Australia PCI was traded at $150 fob Australia during the week, with a mid-August laycan, sources said.

Fastmarkets’ calculation of the index for PCI, low-vol, fob DBCT was $151.9 per dmt on July 16, up by $2.34 per tonne week on week.

Dalian Commodity Exchange
The most-traded September coking coal futures contract closed at 2,035 yuan ($314.85) per tonne on July 16, up by 48.50 yuan per tonne day on day.

The most-traded September coke contract closed at 2,693 yuan per tonne on July 16, up by 59 yuan per tonne day on day.

Decarbonization complicates an already complex marketplace. Our latest analysis, The true price of green steel, does a deep dive into the ripple effects that overhauling the markets will have on the steelmaking process and supply base.

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