09-11-2016

Australian prime hard coking coal spot price moves above $300/mt

Coalimp

Spot premium hard coking coal prices from Australia rose 5.5% Tuesday to move above $300/mt FOB Australia mark on Chinese supply scarcity and keen end-user interest in Asia, sources said.

S&P Global Platts assessed Premium Low Vol $16.25/mt higher at $310/mt FOB Australia, the highest since May 20, 2011 and meaning the spot price has roughly quadrupled this year.

Soaring spot prices in November have been buttressed by robust deal-making by steelmakers and traders alike. Some 14 of 23 premium hard coking spot trades reported done so far this month were concluded to steelmakers, with the rest bought by trading houses.

In terms of a geographical breakdown, seven of the November trades were to China, five to north Asia, two to India, and the rest to other Asian countries or unknown destinations.

Two spot trades for Australian premium mid-vol withe December laycans were done Tuesday at $305-315/mt FOB Australia.

Industry sources said they had been expecting premium coal spot prices to break $300/mt FOB Australia by mid-November as most saw little easing of Australian and Chinese supply issues.

“The market has been reacting very quickly to all the bearish supply news, so prices going past $300/mt [FOB Australia] was bound to happen,” a northeast Asian steelmaker said. “Now the next question is, ‘Will it go higher to hit $325/mt, $350/mt, $350/mt?’.”

China’s bid to cut capacity in its coal industry by reducing the number of statutory working days to 276 per year in March from 336, as well as logistical problems on railways, have been the long-term price drivers.

But near-term supply shortage was exacerbated by continued Australian production problems at South32’s Illawarra mine in New South Wales.

The mining company said October 31 its Illawarra Metallurgical Coal operation will be affected by a four-week suspension of its Appin Area 9 longwall and lower rates of production at the Appin Area 7 longwall, reducing coking coal output by about 0.5 million mt.

Several recent cargoes were snapped up by North Asian steelmakers which prize premium coals with similarly high fluidity, sources said.

Firming Asian steel prices in November have also created created room for further met coal spot price increases, an international trader said.

Source: Platts 

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