March 1, 2019 - Australia's largest metallurgical coal producer, BHP-Mitsubishi Alliance, or BMA, has sold a new brand of hard coking coal named Australian coking coal HS this week, market sources told S&P Global Platts Friday.
Australian coking coal HS has these specifications: 60% coke strength after reaction, 22% air dried volatile matter, 10.5% air dried ash, 10.5% as received total moisture, 0.9% air dried sulfur, 0.015% air dried phosphorus. It also comes with 75% vitrinite, 1200 dial division per minute (ddpm) and a crucible swelling number (CSN) of nine.
BMA did not confirm any details on the new coking coal.
The first cargo of Australian coking coal HS changed hands late Wednesday at $183.89/mt FOB Australia. This was for an 80,000-mt cargo with end-March laycan, sold to a Chinese buyer. The deal was done through an open market sell tender issued by BMA, market sources said.
Market participants had mixed opinions on the price of such a coal compared with the price of a typical Rangal HCC like Lake Vermont. Market sources expect the ash and sulfur content in the Australian coking coal HS to be substantially discounted, but the vitrinite and ddpm properties are better than that of a typical Rangal HCC coal.
"Traditional markets could be interested in this type of coal," a tier-two miner said, indicating that some regions are less sensitive to ash and sulfur content compared with the Chinese users, whose air pollution levels are closely watched by the authorities. Higher ash and sulfur content coals will result in more slag, which reduces the performance and productivity of blast furnace operations.
An end-user said it would likely take a few months to test the suitability of such a coal in a coal blending mix. Buyers seeking high fluidity coals could be interested in Australian coking coal HS, a trader said.
However, the risk of buying a brand new coal remains. "Buyers would prefer to buy a small volume of port stocks for coal blending purposes rather than buy a Panamax-sized cargo of a new brand, unless it enjoys a large discount to the hard coking coal index," a trader said.
Market sources said they were unsure if they could expect more of Australian coking coal HS cargoes in the market.
S&P Global Platts assessed Premium Low Vol coal at $211.75/mt FOB Australia, steady from Wednesday, while the Hard Coking Coal 64 Mid Vol was assessed 50 cents/mt higher to $182.85/mt FOB Australia Thursday.