Atlantic Coking Coal: Prices Steady, Markets Rebalance
October 1, 2020 - Prices remained stable this week, as producers held on to stronger positions after a gradual rebalancing of supply and a return of demand in the Atlantic region.
The Argus daily fob Hampton Roads assessment for low-volatility coking coal edged down by 50¢/t to $114/t, dampened by pockets of availability in the fourth quarter and a pause in Chinese interest in Australian premium low vol. The high-vol A price is unchanged at $116/t fob Hampton Roads, in line with offers for October and November-loading cargoes and workable levels for European mills. The high-vol B assessment remained stable at $105/t after rising by $2/t a week ago, supported by tightening availability and higher offer levels.
A German mill bought a Panamax cargo of Australian high-vol coking coal two weeks ago. "We offered the coal at $90/t delivered, but the mill subsequently bought directly from the miner," said a trader.
Some miners that were offering according to forward curve levels for fourth-quarter deliveries are now offering at current spot levels. "We're happy with the way our sales prices have moved up," said a US miner, "they may even have gone up a bit too quickly, so there could be a small downwards adjustment at some point".
"The US prices have risen quite quickly and are now 20-25pc higher than where we bought in August. The increase is still nothing like the Australian low-vol prices," said one European mill. "But we are comfortable where prices are, and we are covered for the fourth quarter."
Pent-up steel demand in Brazil has meant that mills in the country are confident about the next six months, and are increasing production where possible, miners say. "They took such a huge cut that it caused something like a domestic steel shortage," said a miner. "On the purchasing side, I'd say they are almost back to normal now."
ArcelorMittal will restart its 2.8mn t/yr blast furnace 3 at the Tubarao steel mill in Brazil in the second week of October after halting the facility in April. The producer will run all three of Tubarao's blast furnaces at a reduced level after the restart.
US miners and Indian mills are yet to agree on pricing, amid continued buyer interest. "We've walked away twice in the last week and a half because the price wasn't high enough," said a miner. Some Indian buyers are likely to wait until after China's Golden Week holiday for further indication of price direction in Asia-Pacific before committing.
Strong Chinese met coke demand and pricing have contributed to a global tightness in the met coke market, although tonnes are still being offered to mills without requirements in some cases.
"I won't deny that met coke is more expensive now than it was a few weeks ago, but I would question whether the market is structurally tight," said a German mill. "We were offered €185/t at the Polish border just over a week ago." But other participants have indicated $250-260/t fob Russia for met coke in the past week. Colombian offers have been made at $230-240/t fob Colombia for late fourth-quarter delivery.