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US met coal prices continue to factor in shortages, domestic demand

London (Platts)--12 Mar 2018 454 pm EDT/2054 GMT


Atlantic metallurgical coal markets did not react strongly to steep falls in premium low-vol hard coking coal prices registered Monday, with US coal prices still supported by shortages and domestic forward demand.

Premium low-vol HCC FOB Australia pricing fell following a long period of no spot trading being reported outside of China.

Premium HCC pricing on a FOB Australia basis, with Monday's drop of $14/mt, has fallen more in line with pricing into China, using netback prices from China CFR pricing with Panamax rates.

US high-vol A had been tracking Australian premium low-vol, and limited high-vol A spot volume offers in March and April lent support to prices. High vol-A had already been at a discount to premium low-vol coal prior Monday's move, and remains lower, pricing in the shorter voyages to customers in Europe and Brazil than those for Australian and Canadian coals.

US steel import tariffs may add to domestic demand for coal and coke, particularly for better quality high-vol and mid-vol grades. US offers may be supported until there is further visibility on additional domestic volumes and pricing, as well as how neighboring markets in Canada and Mexico respond.

US high-vol B for delivery outside the S&P Global Platts spot laycan, currently for loadings in March and April, heard offered into a European tender was indicated in the high $130s/mt to mid-$150s/mt, FOB basis. This reflected a range of quality, and slightly higher volatile matter.

Platts assessed US high-vol A, based on 32% volatile matter, 1.1% reflectance straight coal, with low ash and sulfur and CSR typically in the low 60s, down $2 at $215/mt FOB USEC.

US East Coast low-vol HCC fell 50 cents/mt to $199/mt FOB.

The US high-vol B assessment, based on 34% VM unblended product, eased 50 cents/mt to $148/mt FOB USEC.

The Australian Premium Low Vol net forward assessment fell $14.05/mt to $227.15/mt CFR Rotterdam.

Meantime, the Australian market is braced for further rail disruption in Queensland as a result of Aurizon's decision to limit some rail movements and service in line with revised maintenance plans after a revenue cap.

A source said capacity reductions are spreading to those servicing mines on the main Goonyella line. This may end up being more complicated than disruptions on the Blackwater line into Gladstone port, due to haulage requirements at mines on Queensland's main rail artery.

Out of Gladstone, exports of second-tier coking coal and PCI are said to have been slowed down by rail and weather disruption. The premium for PLV, on a FOB Australia basis, with HCC 64 index stood at $15.15/mt on Monday, compared with February's average of a $37.57/mt premium to PLV.

In the futures market, the Singapore Exchange forward curve fell further at the Asian close Monday, after steep falls on Friday.

Trading on Monday totaled 30,000 mt, after 68,000 mt went through after hours Friday.

The Q2 2018 contract's daily settlement price fell $3 to $211/mt at the close.

The SGX March settlement price fell $2 to $222/mt, and April dropped $3 to $215/mt.

The Platts TSI Premium Hard Coking Coal reference price used for settlement on the SGX's coking coal futures fell $3.90/mt to $221.70/mt FOB Australia.

--Hector Forster, hector.forster@spglobal.com

--Edited by Keiron Greenhalgh, keiron.greenhalgh@spglobal.com




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