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Asia met coal trade

A news and data feature

Asia seaborne met coal trade up 7.7% in 2014

By Edwin Yeo and Kenneth Foo in Singapore

February 12, 2015 - The Asia-Pacific metallurgical coal spot market expanded 7.7% in traded volume from 2013 to 66.1 million mt in 2014, as measured by data collected as part of Platts' price assessment process.

The increase was fueled by mine expansions in Australia and came despite a 21.8% year-on-year decline in the average premium low-volatile hard coking coal price to $126.05/mt CFR China in 2014.

Platts captured a total of 852 spot trades in Asia last year, including premium, second-tier, semi-hard and semi-soft coking coal as well as PCI coals, all of which are used in steelmaking.

2014 Met coal total spot volume by producer

Also in this feature: BHP Billiton-Mitsubishi Alliance leads prime-hard market share

In terms of volume, prime hard coals accounted for 31% of the total trades, and second-tier HCC and PCI were both at 26%.

Semi-hard and semi-soft coals accounted for 11% and 6% of overall transaction volumes, respectively.

Analysis continues below...

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The data sample excludes transactions that had no clarity in terms of vessel destination.

The total volume traded in the spot market, 66.1 million mt, appears substantial when compared with the overall Asian seaborne trade, estimated at 200.5 million mt in 2014 from an average of analyst reports from Goldman Sachs and Macquarie.

Spot deals represent one-off trades done between two independent parties and exclude volumes sold as part of long-term contracts, whether quarterly or monthly.

Platts' spot transaction data measures transactions rather than cargo volumes, therefore it would include double-counting if a single cargo changes hands more than once.

China remains top spot buyer

China was still, by far, the largest spot buyer in the Asia-Pacific region, accounting for 88% of the spot trades in terms of volume.

Half of China's total import needs are supplied by Australia, the world's largest met coal exporter, according to Chinese customs data.

While most exporting countries saw a decline in export volumes to China due to weak prices, Australia was the only country with a year-on-year increase to China, up 3.7% to 31.3 million mt in 2014.

Australia now supplies 65% of China's total seaborne import met coal needs, up 15% from 2013.

India, meanwhile, was the second-largest spot buyer in Asia for met coal, accounting for 9% of the total trade volumes.

BHP Billiton-Mitsubishi Alliance's coking coals were the most widely traded in the Asia-Pacific seaborne market in terms of volume, accounting for 49% of total spot deals for all met coals except for semi-softs.

That amounts to a 19% increase in market share from 2013.

The miner accelerated its production last year by 21.2% from 2013 to 81.6 million mt, accounting for nearly half of Australia's total met coal exports.

Australia's Yancoal came in second place, at 10%, followed by Peabody, Jellinbah and Anglo American, each with 8% of traded volumes.

2014 Metallurgical coal chain analysis

The figures do not mean that the miners were involved in every transaction, since much of the coals are sold via merchant trading houses.

Of all of the spot transaction data, for premium hard and hard coking coals, approximately 24% were sold directly from the miner to end-users, 31% were from miners to traders, and 44% either from traders to end-users or to another trader.

The strong presence of traders in the met coal market is reaffirmed by the annual trading volumes of the top six key Chinese traders, which are estimated to account for more than 30 million mt of import volumes, or 48% of China's purchase of seaborne materials.

Transactions for the third leg of a trading chain only amounted to 1% of the data in 2014, a sharp decline from 2013.

Tighter credit in China last year has played a role in reducing the number of smaller traders, shortening trading chains somewhat.

Next article: BHP Billiton-Mitsubishi Alliance leads prime-hard market share

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