FOCUS: Chinese buyers seek out Australian PCI as coking coal, coke prices surge

The Chinese market has flagged robust demand for seaborne pulverized coal injection (PCI) cargoes amid a surge in prices for domestic and imported coking coal, as well as for locally produced coke.

An Australia-origin PCI cargo with volatile matter of around 20 was heard to have changed hands at around $155 per tonne cfr China last week, up nearly $15 per tonne from a similar transaction a week earlier.

The buyer was a Chinese coke plant.

One buyer source indicated that PCI cargoes could fetch up to $160 per tonne cfr China in the coming weeks.

Steel mill sources in China have cited particularly good demand for certain types of PCI products that have good coking properties, which allow them to be used as a blend with hard coking coal in the coke-making process, market participants said.

“Certain PCI cargoes from Australia can be used as blending materials for coking, and given the high hard coking coal prices, buyers are willing to increase the proportion of these materials in their blends,” a steel mill source in China said.

Seaborne coking coal prices have been on the rise since early November, with shipping delays out of Queensland, Australia resulting in a scarcity of fixed-price offers in the spot market.

Metal Bulletin’s cfr China Premium Hard Coking Coal Index stood at $215.65 per tonne on December 20, up from $182.52 per tonne on November 1, just before prices started to rise.

The Metal Bulletin fob Australia index rose even more sharply - it went from $178.08 per tonne on November 1 to $247.90 per tonne on December 20.

A cokery source in China also said than an accident at a mine in the Shaanxi region producing “lean coal” earlier this month had also resulted in higher domestic prices for the steelmaking raw material and was creating demand for seaborne PCI that can act as a substitute.

According to market participants, lean coking coal is mainly used for the production of coke in China. Its volatile matter of around 20 (air dried) and relatively higher crucible swelling index - which increases fluidity in coal - make it suitable for the process.

Another buyer source in China said that the mine accident had a limited effect on lean coking coal prices in China, however.

But he said that domestic prices were more affected by production cuts being carried out at mines across the country as they wind down for the year and reduce wash plant operations to ensure compliance with environmental protection measures.

A surge in coke prices in China and resultant higher export offers were also driving demand for PCI, an ex-China buyer source said.

PCI is typically used to provide supplemental carbon in the iron making process, thereby reducing the requirement of metallurgical coke but in no way eliminating it.

“We often increase the proportion of PCI when coke prices move up too much as is the case now,” a Southeast Asian steel mill source said.

Metal Bulletin’s assessment of prices for coke with 65% CSR (coke strength after reaction) stood at $360-365 per tonne fob China on Tuesday, up from $345-350 per tonne fob China a week earlier.

These increases were due in no small part to the sharp gains in China’s domestic coke market earlier this month.

For instance, east China’s Rizhao Iron & Steel raised its purchase price for cargoes with 58% CSR three times between December 1 and December 7, which brought it to 1,950 yuan ($297) per tonne.

Domestic coke prices were heard to have moved up again this week, this time by up to 150 yuan per tonne, sending them to over 2,000 yuan per tonne.

Meanwhile, in India, a buyer source is of the opinion that the price increases for PCI are a result of costlier premium hard coking coal pulling up prices for the entire spectrum of coal grades.

What to read next
Fastmarkets has decided to proceed with the launch of a new European low carbon ferro-chrome price covering material with lower chrome content.
Fastmarkets invites feedback on a proposal to increase the publication frequency of non-exchange-deliverable equivalent-grade (EQ) copper cathode premium, cif Shanghai, from once every two weeks to once every week.
The outlook for North American steel scrap prices has headed further into bearish territory ahead of June’s trade, with prices for all grades expected to fall again after a round of across-the-board decreases in May
Fastmarkets is inviting feedback on a change of publishing time for our ferro-chrome price in the Chinese domestic market as well as ferro-chrome import prices in Japan and South Korea, to 5-6pm Shanghai time from 2-3pm London time.
Fastmarkets is inviting feedback on a proposal change the publishing time for our silico-manganese, ferro-manganese and manganese ore port prices in China, to 5-6pm Shanghai time from 2-3pm London time.
The publication of Fastmarkets copper concentrates TC index, cif Asia Pacific was delayed on Friday March 26, due to a reporter error.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.