Widening bid/offer spread keeps seaborne coking coal prices down

Wide bid-offer spreads, high mill inventory levels and slack downstream consumption saw the Asian seaborne hard coking coal spot market show falls across the board on Monday March 24.

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“Bid and offer spreads of around $4 are not easy to match, so few deals have been concluded in recent days. Most buyers have adopted a wait-and-see approach,” a trading source told Steel First.

Steel First’s premium hard coking coal index for material sold on a cfr Jingtang basis was calculated at $121.91 per tonne on Monday, down by $0.11 from prices seen on Friday.

The premium hard coking coal index fob Australia’s DBCT port was $111.03, down by $2.08 from Friday.

The cfr hard coking coal index stood at $110.84 per tonne on Monday, down by $2.92 per tonne. The fob value was $101.73 per tonne, down by $1.94 from Friday.

The weaker coking coal futures prices over the past few days have also damped market confidence. Coking coal futures on the Dalian Commodity Exchange recorded drops over the final three consecutive trading days of last week.

On Monday, the exchange’s most-traded September coking coal futures contract closed at 797 yuan ($129) per tonne, down from Friday’s close of 805 yuan ($131) per tonne.

The most-traded September coke contract, however, closed higher at 1,183 yuan ($192) per tonne, compared with the previous trading day’s close of 1,167 yuan ($190) per tonne.

While some market participants pointed to decreasing port stockpiles as a signal that the market could see a rebound in the near term, others said that the high steel inventory levels would take some time to be consumed because downstream demand remained weak.

On Monday, there was a total of 4.64 million tonnes of coking coal at the Jingtang port, down from 4.77 million tonnes a week earlier. Rizhao port has 2 million tonnes, down slightly from 2.01 million tonnes recorded last Monday.

HSBC’s flash China manufacturing purchasing managers’ index (PMI) stood at 48.1 points for March, compared with a final reading of 48.5 points in February, according to data released by the bank on Monday.

The figure was also lower than the market consensus of 48.7 points.

Japanese steel mills are looking at a second-quarter benchmark price lower than $120 per tonne fob Australia, although a settlement has yet to emerge. BHP Billiton Mitsubishi Alliance was heard continuing its push for shorter-term pricing, as opposed to quarterly settlements.