Supply tightness in the high-volatile coking coal segment and continuing demand strength from Chinese buyers for Atlantic low-volatile coals kept US prices firm today.
The Argus fob daily assessment for low-volatile coking coal was unchanged at $125/t fob Hampton Roads, with robust demand from Chinese mills driving the China cfr assessment up to $170-175/t this week, while December-loading cargoes bound ex-China destinations are at around $120/t fob.
The high-volatile A assessment was flat at $125/t fob Hampton Roads today, but rose by $5/t yesterday as low spot availability going into next year lent support to offers, which rose to $125-130/t fob Hampton Roads this week. The high-volatile B assessment was similarly stable at $111/t today, with little to no spot availability as far as the first quarter driving the price.
While the Argus-assessed Australian premium low-volatile price has risen to $102.60/t fob Australia today from below $100/t nearly two weeks ago, spot offers for Australian coals for first-quarter loading remain in the market. A European mill secured a 162,000t January-loading cargo of Peak Downs this week. A Brazilian mill was heard to have bought a cargo of early first quarter-loading Australian premium low-volatile coal in the past week. "As they're substituting for US material, they're buying one of the cheaper premium low-vols, possibly a blend. They'll get cheap backhaul freight too," a trader said. An eastern European coke producer also bought a Panamax of Australian premium low-vol for January loading.
But US miners are still selling small volumes to markets outside China for around $120/t fob Hampton Roads, traders said.
The squeeze in the high-volatile coal segment is expected to continue well into the first half of 2021. A lot of high-vol B coals have already been sold under term contracts, a Europe-based trader said. Spot offers for the first quarter are very limited if any and some buyers initially seeking out high-volatile B coals may have to look to high-volatile A. A major US miner is offering $125-130/t for high-volatile A and $111-115/t for high-volatile B to be delivered in the first and second quarter. "The market is tight because some of the Americans that were worried about the export market pushed a lot of high vols into the domestic market for next year," the trader added.
Cargoes of Russian high-vol coking coal have sold to China for $120-125/t cfr recently, and suppliers are pushing up offers towards $130/t cfr China. A cargo of Russian high-vol for December loading was heard to have traded at $125/t cfr China recently.
