First-tier Australian coking coal prices edged down as market uncertainty persisted, despite sustained trading.
The Argus-assessed Australian premium low-volatile hard coking coal price fell by $1.85/t to $227/t on a fob basis, while the tier-two mid-volatile price fell by $3/t to $191.55/t fob Australia.
Trading picked up in the fob Australia market today. A major producer sold a 75,000t cargo of Peak Downs loading 1-10 September at $229/t fob Australia today, with a seller's option to deliver Saraji coking coal at the same price.
A 40,000t mid August-loading cargo of German Creek was sold by a producer to a southeast Asian buyer at $218/t fob Australia today. The deal came with another 40,000t of Moranbah North with the same loading date concluded on an index-linked basis. Participants assessed the German Creek at a 2-5pc discount to Saraji. "Brand relativity is demand-supply related, so it changes due to market conditions, but the brand is not a preferred coal because it cannot be used by itself and needs to be blended, so a deep discount is usually expected," an Indian trader said.
Market sentiment was mixed, with some traders expecting tier-one prices to correct further on subdued demand during the Indian monsoon season, and other participants expecting prices to remain range-bound. It would be reasonable for tier-one prices to fluctuate in a $5-10/t range, since the coking coal market is volatile, an Indian trader said, suggesting that interested buyers would prefer trading on a part fixed-price and part index-linked basis to reduce risks. Another trader pointed out that recent price fluctuations had caused some confusion, adding that today's traded price seemed fairly reasonable, although spot supply of premium low-volatile coking coal appeared to be limited.
Meanwhile, a major producer canvassed buying interest for a 15-24 August-loading premium mid-volatile hard coking coal cargo, with brands including Goonyella C/Riverside/Caval Ridge coking coal at seller's option.
The same producer was also seeking bids for an Australian coking coal cargo for loading in the second-half of August with a specification of 10.5pc ash.
In the second-tier segment, an August-loading cargo of Carborough Downs was offered at parity with the tier-two hard coking coal (HCC) fob Australia index by a trader today.
The premium hard coking coal price to India fell by $3.15/t to $238.70/t on a cfr basis, while the second-tier price fell by $3/t to $204.55/t cfr east coast India.
The premium low-volatile coking coal price to China rose by 5¢/t to $226.30/t on a cfr basis, while the second-tier price rose by 5¢/t to $196.85/t cfr north China.
In China, demand for seaborne coking coal remained tepid as buyers continued to favour readily available and lower-priced domestic coal.
One Chinese trader noted that imported offers for prime hard coking coal at $240/t cfr China were not competitive, with another suggesting that $220/t cfr China offer levels would be more reasonable for end-users.
The offer level for US Thor was indicated around $210/t cfr China today, but further details could not be confirmed by market close.
In the met coke segment, major coke producers have proposed a second price hike of 50-60 yuan/t ($6.93-8.32/t), citing rising raw material costs that have weighed on coke margins, even after the first price hike.
Fob Australia rationale
The fob Australia premium low-volatile index was based on an average of the day's deals and surveys, both weighted at 50pc of the index. A 75,000t cargo of Saraji, with a September laycan, traded at $229/t and was normalised flat. A 40,000t cargo of German Creek, with an August laycan, traded at $218/t and was normalised to $227/t. The market survey was in the range of $220-229/t and averaged $225.71/t.
