Fewer offers in Asian seaborne met coal spot market on seller resistance
Fewer offers of seaborne metallurgical coal are being heard into China as sellers are unwilling to deal at lower levels, market participants told Steel First on Tuesday July 29.
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Most of the August-laycan cargoes have already been booked and Chinese buyers are not keen on September cargoes as of yet, one trader and a steel mill source said.
Mills are primarily not interested in seaborne material because domestic sellers continue to offer them cheaper alternatives.
As seaborne prices become more transparent, several buyers said they could get a 10-30 yuan ($2-5) discount for similar-quality domestic coal on a delivered basis.
“[Chinese] domestic coal producers have [substantial] inventories, but demand is still pretty weak,” said the mill source.
“We don’t have immediate plans to purchase [seaborne material], but would consider it if prices are low enough,” a second mill source said, adding that his company has ample stocks as they made several bookings over the past two months.
Top Australian brands were offered at $126-127 per tonne cfr China, while some higher-rank, second-tier hard coking coals were heard offered at $108-110 per tonne cfr China.
Main Chinese ports reportedly had a total of 10.31 million tonnes of coking coal on Friday July 25, down from 10.79 million recorded a week ago. Jingtang port inventories have also come down to 3.97 million tonnes, compared with 4.25 million tonnes the Friday before.
In Japan, spot demand appeared to be concentrated on higher coke strength after reaction (CSR) hard coking coals and pulverised coal injection (PCI) coals, according to a trading source.
Steel First’s premium hard coking coal index for material sold on a cfr Jingtang basis was calculated at $122.14 per tonne, up $0.02 on the day. The cfr Jingtang hard coking coal index was up $0.68 to $106.41 per tonne.
The fob Australia premium hard coking coal index was up $0.97 to $115.92 per tonne, while the fob Australia hard coking coal index jumped $3.20 to $100.95 per tonne.
On the Dalian Commodity Exchange, the most-traded January coking coal futures contract closed at 800 yuan ($130) per tonne on Tuesday, up from Monday’s close of 796 yuan ($129) per tonne. The most-traded January coke contract closed up 9 yuan ($1.5) at 1,140 yuan ($185) per tonne.
The yuan prices are the equivalent of cfr prices plus 17% VAT and port charges of about 35 yuan ($6) per tonne.