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 Australia respectively.

"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 said.

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 Chinese demand.

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 CFR China.

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.

COKE STABLE

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 December.

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, helena_sheng@platts.com; Edwin Yeo, edwin_yeo@platts.com; Julien Hall, julien_hall@platts.com
--Edited by Jonathan Fox, jonathan_fox@platts.com

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