Atlantic coking coal: 1Q buying supports prices

Source : https://www.argusmedia.com/en/news/2147690-atlantic-coking-coal-1q-buying-supports-prices?backToResults=true

 

US coking coal prices edged up today, supported by signs of first-quarter demand emerging and an acceptance among buyers that discounts seen as recently as July or August are no longer available as supplies tighten.

The Argus daily fob Hampton Roads assessment for low-volatility coking coal was stable today at $114/t, as interest in Europe for late October to November is limited. The high-volatile A price moved up by $2.50/t to $124/t fob Hampton Roads, as indications of supply tightness from some mining firms pushed up offers, although buyers have yet to commit to deals. The high-volatile B assessment rose by $2.50/t to $110/t fob Hampton Roads as producers are pushing $111-112/t for further first-quarter sales.

"There has been a lot more activity lately. It started with people restocking and trying to take advantage of prices for next year," one US mining firm said. "There are also Indian mills in discussion for high-vol A coals, but we are sold out until the end of March now," the firm said.

Actual spot demand has still been slow to emerge in Europe, but mills are keen to take their full contracted term volumes and some are heard to be seeking cargo advancements. There is an element of demand increasing but also uncertainty over the impact that Covid-19 might have on shipments, one supplier said.

Indian buyers are in the market and looking for freight adjustments to prices offered to European mills, but sellers do not appear to be in a rush as they anticipate the market strengthening further. "There is no rush to sell as the market should move higher after the [Chinese] Golden Week holiday [1-8 October]," said another miner, expecting the return of Chinese buying to buoy prices. Requirements for low-vol and high-vol A coking coal have emerged from Indian buyers in recent weeks.

A Brazilian mill is due to make a final decision tomorrow on its tender to buy 450,000t of mid-volatile coal and 420,000t of low-volatile coal, to be shipped in 2021.

A Turkish mill is in the market seeking two cargoes of high-volatile coking coal for December loading, while another Turkish mill appears to have extended its tender seeking two mid-vol blend cargoes for delivery in October and November. This is likely to be the result of the recent rapid increment in prices, market participants said. At least one US producer had an offer of significantly above $110/t refused by the mill.

US mine capacity has continued to tighten this week, with local firm Peabody announcing a six-month closure of its Shoal Creek mine and laying off workers, as a result of revenue loss and declining coal demand. The mine produced 204,547t of high-volatile A coking coal in the second quarter, down by more than 70pc compared with a year earlier, data from the US Mine Safety and Health Administration show.

Metallurgical coke remains in short supply, although some participants have downplayed the level of new demand for coke. "Essentially it was one mill demanding one cargo that caught suppliers out," a trader said. A European mill bought a 40,000-50,000t cargo of met coke from another European mill, to be delivered by rail. "I offered $215/t fob Europe in order to sell it to Asia, but they could get a much better price in Europe", a trader said.

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