2016 REVIEW: After record high, seaborne coking coal market awaits price floor

Buyers and sellers in the seaborne coking coal market are awaiting the emergence of a price floor as they enter 2017, having witnessed a year of record-high prices.

The lack of physical market activity since the second week of November, when fob Australia prices passed $300 per tonne, was in sharp contrast to the buying frenzy in the previous months on the back of supply constraints. Prices take off The initial boost to the seaborne coking coal market came from weather-related supply disruptions in north China around July that resulted in a short-term supply tightness. The Chinese government’s resolve to cut overcapacity in the coal sector further put the prices “on the fast and high road”, as one trader said. To that end, the government mandated that coal mines operate for only 276 days in a year instead of 330 days. The move was introduced to curb overcapacity in the coal market, with the rise in prices resulting in analysts pointing at the “underestimation of the output lost in the previous years of low prices”. Coal output in...

Published

Deepali Sharma

December 23, 2016

19:00 GMT

Singapore