ASIA COKING COAL: Limited supply supports seaborne spot price
Singapore (Platts)--12Nov2012/755 am EST/1255 GMT
The Asia-Pacific coking coal market was relatively quiet Monday with
market sentiment appearing to support current spot prices. While there was an
observable lack of offers heard for some categories of metallurgical coals,
buyers seemed unwilling to raise their bids.
Platts assessed both premium low-vol HCC and mid-vol HCC with 64% CSR
(coke strength after reaction) unchanged at $161/mt FOB and $141.50/mt FOB
"There's been a huge volume of coal going from Australia to China, and
pricing has certainly jumped up. But it got a lot slower at the end of last
week," a miner said.
He explained that much had to do with increasingly limited availability
on the sell-side, and price resistance on the buy-side as end-users are
emboldened by their now larger inventories. "There's not much demand left in
China," an Australian trader said. "End-user demand is not strong."
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But a source said traders remained active in the spot market.
In China, some high offers were heard for premium material. A December
cargo of Australian HCC with around 65% CSR, 23-25% VM, 8-9% ash and 0.5%
sulfur was heard offered above $170/mt CFR China, which was said too high by
both a steel mill and a trader.
Another mill source said some premium Australian coals and the very best
Canadian coals were still available at $165/mt CFR China, mainly from traders
who took positions in October.
Market sentiment for forward cargoes, such as for January loading, had
improved, a mining source said in view of tight supply.
"People only wanted cargoes loading before late December one to two
weeks ago. But some have begun to inquire for January cargoes recently as
they found out that no more cargoes were available for December," the source
One trader saw supply on the domestic Chinese coking coal market staying
tight even after the Party Congress which is due to wrap up this week.
There will be a lag for domestic mines to return to their operating
production capacity to fully satisfy domestic demand, the trader said. The
source added that production would not fully recover in December and January
as Chinese New Year is in early February, when mines again stop production.
In India, the market was quiet on Monday with many participants
preparing for the Diwali holiday celebrations which last till Thursday.
Buying appetite remained lower than expected due to a slow Indian steel
market and a recent drop in the Indian Rupee which has cut local purchasing
power for imports, market participants said.
"Steel sales are still not good. Also, most mills are carrying high
inventory of coal and steel," one Indian source said. "The exchange rate is
also not helping at all with the market."
The source said most mills he had spoken to are carrying two months'
worth of coal inventory, hence there was no pressure to buy on spot.
But one steel mill said the market would pick up after the holiday.
Indicative bids in India hovered at $148-155/mt FOB for premium
Australian coals, lower than Chinese buying interest.
For second-tier HCC, an Indian mill was last week offered 50,000 mt of
Australian 58-60% CSR, 28-30% VM and 8-10% ash HCC at $135-140/mt FOB
Australia for December loading.
In spite of this, supply was generally tight according to other sources,
which seemed to support current prices.
PCI STILL TIGHT
PCI supplies from Australia and Russia are failing to meet resilient
An east China trader got a bid from end-users for Russian PCI with below
12% VM, and 12-14% ash at $125-128/mt CFR north China. But a north China
trader said major Russian mines had sold out already.
"Japan and Korea are buying quite a lot from Russia, resulting in
smaller than before volumes for China," a trader said.
With tight supply and strong demand, sources with mines and traders said
it would not be hard for Australian PCI with 16-20% VM to sell at $122-125/mt
But a Chinese trader said current spot prices were "not sustainable" and
would soon fall.
"PCI prices have been moving too fast." The trader was only willing to
bid at $135/mt CFR China for top-tier PCIs such as South Walker Creek because
anything higher might imply a loss since spot prices in December when the
cargo arrives will "definitely be lower," the trader said.
Metallurgical coke remained stable Monday, though there were still some
indications of further weakening of the market.
Platts assessed 62% CSR unchanged at $307/mt CFR east India Monday.
While sell-side sources have been highlighting the recent rise in spot
prices for coking coal as a sign coke prices would rise, many other market
participants said prices would fall in view of the possible upcoming removal
of the Chinese export tax duty.
"The Chinese factor is more important than the rise in coal prices," one
large Indian mill source said.
The mill source, along with other participants, said more discounts for
spot coke were needed to induce buyers to buy.
A spot deal for a two-month supply of 50,000 mt of 60% CSR CIS met coke
was heard done into the Middle East at $265/mt FOB Caspian Sea last week.
A Singapore trader reported selling Australian high-CSR material to
India on November 7 at $315-320/mt CFR West India for 35,000 mt loading early
The price is broadly in line with a Sail tender closed last week that
was awarded at $318/mt CFR India to an international trader for Australian
65-70% CSR coke, which was based on bids received in October.
In the domestic Indian market, 62/60% CSR coke was said to be selling at
around Rupee 17,000/mt ($311/mt) ex-works West India.
--Helena Sheng, firstname.lastname@example.org; Edwin Yeo, email@example.com; Julien Hall, firstname.lastname@example.org
--Edited by Jonathan Fox, email@example.com