Atlantic Coking Coal: Chinese Interest Steadies Prices
November 7, 2020 - Signs of Chinese buyers closing in on further US and Canadian coals this week, along with ongoing supply tightness for a number of US coal grades, have kept US coking coal prices largely steady at the end of this week.
The Argus daily fob Hampton Roads assessment for low-volatile coking coal moved down by 50¢/t to $108.50/t, with Chinese buyers leaning towards mid-volatile US coals to fulfil any shortage rather than the typical low-volatile material on offer from US mines. The high-volatile A assessment edged up by 50¢/t to $119/t as the lack of spot availability continues to support the price. The high-volatile B price remains unchanged at $104/t fob Hampton Roads amid limited liquidity.
Discussions are ongoing between a number of US suppliers and Chinese counterparties as China's clamp-down on Australian coal imports continues to see Chinese mills seeking alternative coals. Interest in US mid-volatile coals and certain low-volatile grades has been growing in recent weeks, with a few deals understood to be under negotiations or close to finalising.
A cargo of high-quality mid-volatile 72 CSR US coking coal was heard to have traded at $152/t cfr China but the deal could not be confirmed. A cargo of high-volatile Canadian Raven coal for December loading was sold at about $148/t cfr China yesterday, but details could not be verified. The price included a 3pc import tax.
The supply situation for US high-volatile coals remains tight, with a key high-volatile A producer having no spot availability until after the first quarter at least. "We are not hearing of many people trying to move whole cargoes before the end of this year, unlike what we have seen in previous years," one US mining company said.
While US output is expected to see a significant bump up next year with the start-up of Arch Resources' 4mn t/yr Leer South mine in the third quarter, the weak price scenario this year has dampened plans for other mining firms. Consol has slowed spending on the construction of the Itmann coking coal mine in West Virginia. Construction of the mine started in the second half of 2019 and development mining began in April. Full production from the mine is expected on the completion of a new preparation plant. The pace of construction depends on coal sales market conditions, Consol said. When fully operational, the company anticipates about 900,000 st/yr of low-volatile coking coal capacity.
Metallurgical coke remains in tight supply globally, driven by strong demand in China, while Latin American mills have also returned for Colombian met coke in the past few months, with the restart of their blast furnaces. "There is a bit of a met coke shortage in Europe, so I wish I was offering," a trading firm said. Colombian met coke producers are largely sold out for the rest of this year. China has been an outlet for Colombian met coke this year, which is unusual because of the long sailing times and China's own domestic coke industry. Colombian producer Coquecol expects to sell two 20,000t met coke cargoes to China in the fourth quarter.