A rebound in spot premium coking coal prices has left market pricing better balanced with second-tier HCC and mid-tier PCI grades, according to S&P Global Platts analysis.
A rally for premium HCC prior Lunar New Year celebrations as Chinese mills led a restock allowed the index to recover some ground lost in January.
TSI Premium HCC was steady at $233.10/mt FOB Australia Monday from just before the break in Asia, while prices have rebounded $15/mt since February 1.
Domestic Chinese coal pricing against a weaker US dollar made imports more attractive over the past few weeks, and winter weather supply constraints in central China further opened up appetite for booking seaborne imports of met coal.
This was especially so for high CSR coking coal, with demand for second-tier HCC in FOB markets stable.
The slide in premium coal spot prices in January meant that over the first half of February prime coals had recovered lost price relativity over second-tier HCC and mid-tier PCI.
Based on spot trade price data averaged over 15 and 30 days, TSI Premium HCC this week is now pricing at a small premium to expected trading value against TSI’s second-tier HCC and Platts mid-tier PCI.
Platts TSI Met Coal RSI Tracker data generates daily indexes indicating relative price strength and weakness for each coal type compared with peers over the past 15, 30 and 60 trading days.
In the Australian FOB met coal market Monday, the tracker showed premium HCC pricing trended 1.59% above its 30-day average price relationship with second-tier HCC and PCI.
TSI Platts Australia met coal RSI Tracker
Over 60 days of data, premium HCC was pricing 2.19% below historic expected value. These indicators may provide context on premium HCC pricing against recent performance.
TSI Premium HCC’s RSI was over 10% below 30-day expected value on January 24, when the coal was at $213.70/mt FOB Australia.
On Monday, second-tier TSI HCC prices trended 1.6% below expected value on 30-day trade history, while mid-tier PCI was around parity to expected value, using 30-day trade data with the two coking coal grades.
Before the recent plunge in relative value for premium HCC, Platts TSI Met Coal RSI Tracker data showed that since November 7, 2017, and until mid-January, premium HCC prices had trended with varying positive RSI figures over the two met coals.
Second-tier HCC’s RSIs moved back to negative figures February 7, while mid-tier higher ash PCI prices have shown positive relative values since mid-January.
The latest move up for premium HCC may help support views that market prices needed to adjust after the sharp slide in premium HCC prices in January.
China’s domestic-to-import coal arbitrage window has been open since January 17, using Platts data. The window had narrowed to $6.79/mt before the Lunar New Year from a peak of $20.94/mt January 24, according to Platts data.
Platts steel mill spreads in China show strong price spreads for HRC with the cost of imported iron ore and coking coal and those for rebar slightly softer but remaining at relatively strong levels.
Source: PlattsPrevious Next
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