US coking coal prices rose today as Chinese mills continued to accept rising offers for US product, driving up China cfr prices heard in the market, although some market participants were sceptical that prices were as high as indicated.
The Argus daily low-volatile fob Hampton Roads assessment rose by $2/t to $100.50/t, boosted by the strength of near-term Chinese demand, with Chinese buyers prepared to pay a premium for US material over Australian coal. The high-volatile A price was unchanged at $119/t fob Hampton Roads, with a number of mining firms indicating limited liquidity going into the first quarter. The high volatile B price edged up by $1/t to $105/t fob Hampton Roads, similarly supported by tighter supply.
Chinese mills’ lack of resistance to higher offers could see prices rise further if more deals are completed in the coming days. “The fact that we have been able to transact on cargoes for the first quarter indicates that Chinese mills don’t expect the ban [on importing Australian coal to China] to necessarily be lifted by January,” a mining firm said.
A cargo of US low-volatile hard coking coal for end of December-loading was heard to be sold to a south China steel producer at $145/t cfr China, and another cargo of high CSR low-volatile coal for end of December-loading was heard to be sold at around $156/t cfr China, up by at least $4/t from a similar trade heard late last week. But Atlantic basin market participants were sceptical that such prices could have been achieved so quickly. A US mining company sold several Panamax cargoes of high CSR low-volatile coal to China at around $140/t cfr in recent weeks.
Offers for Australian fob cargoes are still making their way to buyers in Europe. A northern European mill received an offer for a Panamax cargo of Peak Downs at $105/t loading in December, but declined the offer, which was heard to have been taken up by an Indian mill. “The price was attractive but we simply had no requirement for such a large volume of premium low-volatile coal in December. It was too early and too much,” the mill said.
US producers are upbeat about market fundamentals in Europe and Brazil, despite Australian suppliers also being active in those regions in recent weeks. Steel demand from the European car industry has been strong, and the initial discovery of a potential Covid-19 vaccine coming soon after Joe Biden’s victory over Donald Trump in the US presidential election have contributed to a surge in stock markets.
A US producer negotiating a cargo for February delivery to a South American mill is seeking to achieve forward curve-level pricing, while the mill is pushing for current spot price levels, amid expectations of stronger pricing for coking coal in the next few months. But some participants anticipate that Australian offers could start to weigh on the Atlantic market. “With European and South American buyers preferring to secure longer-term supply arrangements, Australian coal being offered into those markets and not finding spot buyers could put a lot of pressure on pricing in the short term,” one participant said.