Atlantic coking coal: US prices hold steady

US export coking coal prices held steady in the past week, with underlying demand fundamentals firm but many market participants pausing to gauge market direction ahead of a major industry event in mid-November.

The Argus weekly fob Hampton Roads assessment for low-volatile coking coal was unchanged today at $205/t. The weekly fob Hampton Roads assessment for high-volatile type A (HVA) material is flat at $213.50/t, while the high-volatile type B (HVB) assessment remains at $173/t.

Underlying demand fundamentals are firm, but European buying activity has been limited in the past week with the bulk of 2018 requirements now covered, and those buyers who require extra cargoes opting to wait and see how the market develops.

US producers are largely sold out of key brands for 2018, particularly in the HVA space. Cargoes of other specifications and blends can still be secured, assuming a workable price can be agreed on, according to several market participants.

Some Europeans see US coking coal prices as overheated and likely to drop if infrastructure constraints ease. Some on the sell-side say seaborne fundamentals do underpin the price levels being targeted by US exporters, adding that buyers are unlikely to step forward while they consider prices to be peaking but cannot wait indefinitely.

"Anyone who wants to take a December position will have to make a move soon," a seller said.

Within Europe, attention remains focused on low German waterway levels which continue to disrupt the delivery of raw materials from ARA ports to certain mills. Some options - such as the use of rail or discharge of material at alternative ports - are being explored in order to get more material moving, a trader said.

Rhine water levels at the key measuring point of Kaub have risen to 53cm at 13:00 local time today from 29cm a week ago, but are well below the 200cm threshold at which barges run into difficulty.

US low-volatile coking coal remains a more attractive option than Australian material. Prices of the latter have risen by $7.80/t in the past week, with the Argus daily fob Australia assessment for premium hard low-volatile coking coal at $225/t today. Factoring in freight rates to Rotterdam, a Panamax cargo of US low-volatile coking is pricing at around $219/t cif ARA, as compared with a Capesize cargo of Australia low-volatile PHCC at around $240.20/t cif.

South America

Looking elsewhere, some Brazilian buyers have already begun discussions for 2019 US coking coal supply deals. More are expected to step forward soon, while others will be focusing their contract negotiations around the April-March fiscal calendar.

The loss of Pinnacle as a key low-volatile supplier has created a gap in the Brazilian market that several US producers are keen to fill. Some market participants point to Coronado's Buchanan coal as a potential replacement owing to its similar specifications to Pinnacle coal, and because Buchanan was one of the US brands directly affected by China's imposition of tariffs on US coking coal earlier this year - meaning there would be material needing redirection from China to other markets.

Meanwhile, a Colombian market participant today cited an overall ex-mine price range of 300,000-380,000/t pesos ($94.19-119.30/t), depending on the mine and grade. Transportation costs from mines in the Cucuta region to major ports range from Ps85,000-110,000/t while transportation costs from Boyaca/Cundinamarca to major ports are estimated in a Ps120,000-155,000/t range. Rising fob Australia indexes and robust demand - particularly growing Asian interest in Colombian coal - is encouraging exporters to push for premiums where possible.

The Argus weekly fob Colombia assessment for mid-volatile coking coal is at $179/t - up by $4t from a week ago.

A trader noted Colombian met coke being offered into Europe along with Polish, at a widening discount of more than 10pc to Chinese met coke, noting that the European met coke market is pricing at lower levels than China. The Argus fob north China assessment for 62 CSR met coke is at $376/t today.