COKING COAL DAILY: Buying interest supports cfr, fob market

Seaborne coking coal prices increased in both the cfr and fob markets on Friday July 23 due to more trading activities, sources told Fastmarkets.

Prices for seaborne pulverized coal injection (PCI) inched up in the cfr market in the week to July 23 due to tight domestic supply for high quality resources. The fob market also continued to increase due to strong coking coal prices, sources said.
Fastmarkets indices
Premium hard coking coal, fob DBCT: $215.06 per tonne, up $0.92 per tonne
Premium hard coking coal, cfr Jingtang: $314.41 per tonne, up $3.88 per tonne
Hard coking coal, fob DBCT: $181.91 per tonne, up $1.00 per tonne
Hard coking coal, cfr Jingtang: $270.00 per tonne, up $2.10 per tonne
Coking coal market
The seaborne coking coal market continued to be strong on Friday with offers for United States-origin coking coal at elevated levels.
An offer for US-origin premium low-volatility (PLV) hard coking coal was heard at $320 per tonne cfr China, yet no firm bids were reported.
Some market sources noted that the price spread between US-origin PLV and second tier hard coking coal is about $30-40 per tonne cfr China while a few traders said the price spread would expand.
“Chinese steel mills mainly want imported high quality PLV due to domestic supply tightness,” a mill source from east China said.
The source also expected more supply from North America to China in the coming months because some miners have reduced volumes to Japan and South Korea.
“Although the increased volume is probably limited,” the source added.
Market participants noted continued limited supply in domestic high quality PLV cargoes; it is difficult for new clients to buy or sign term contract with some coal mines from Shanxi province.
A few large steel mills have started a new round of procurement for seaborne coking coal through tenders, which may continue to support the market price, sources said.
A deal of US-origin PLV was traded at $313 per tonne cfr China through mill’s tender, sources said on Friday.
The fob Australia coking coal market also surged with new procurement demand from end users, sources said.
An India-based coke producer said the demand for Australia PLV is good amid active transactions and the transaction price continues to reach new highs.
Some buyers have shown buying interest for far-month cargoes by giving increased bids in the Global Coal platform, such as PLV loaded in October or November.
40,000-tonnes of PLV were traded at $215 per tonne fob Australia on July 22, with a laycan September 16-25.
75,000 tonnes of PLV, loaded in late August, were traded at $214 per tonne fob Australia on July 22, with an option to replace it with another brand of PLV at $215 per tonne fob Australia, sources said.
PCI market
The seaborne PCI market in China in the week to July 23 increased slightly with more Russia-origin cargoes being offered at high levels due to the tight domestic supply in China, sources said.
Some of China’s coal mines have reduced production of PCI to assure the supply of thermal coal following the guidance from local government, participants said.
The price spread between offers and bids for seaborne Russia PCI remained large, a Russian supplier told Fastmarkets.
Another trader source from Beijing also mentioned that it is more difficult to find buyers after they increased their offer price.
Current offers for Russia PCI with low-volatility and high-HGI are $180-182 per tonne cfr China, and the low-vol and low-HGI PCI from Russia was offered $165 per tonne cfr China with August laycan in the reported week, up by $5 per tonne compared with the previous week.
“There are some Russian cargoes arriving at China’s ports, [there is] not much shortage in supply this week,” a trader source from north China said.
Fastmarkets’ calculation of the index for PCI, low-vol, cfr Jingtang was $173.22 per dry metric tonne on July 23, up by $2.56 per tonne on a weekly basis.
The fob Australia PCI price remained strong in the week to July 23 amid continuous supply tightness in the spot market
No deals of Australia PCI were reported in the spot market during the week, but market sentiment for PCI prices is bullish due to the rising coking coal market, sources told Fastmarkets.
Fastmarkets’ calculation of the index for PCI, low-vol, fob DBCT was $156.79 per dmt on July 23, up by $4.89 per tonne on a weekly basis.
Dalian Commodity Exchange
The most-traded September coking coal futures contract closed at 2,115.50 yuan ($326.97) per tonne on July 23, up by 30.50 yuan per tonne day on day.
The most-traded September coke contract closed at 2,769.50 yuan per tonne on July 23, up by 32 yuan per tonne day on day.
Decarbonization complicates an already complex marketplace. Our latest analysis, 'The true price of green steel', does a deep dive into the ripple effects that overhauling the markets will have on the steelmaking process and supply base.

Alice Li

alice.li@fastmarkets.com

Published

Alice Li

July 23, 2021

11:18 GMT

Shanghai