Atlantic coking coal: Prices dip, supply concerns hold

US export coking coal prices edged down in the past week under pressure from falling steel and iron ore prices, but persisting supply concerns and approaching seasonal weather-related risks continue to lend support.

The Argus weekly fob Hampton Roads assessment for low-volatile coking coal is at $204/t today, down by $2/t week on week. The weekly fob Hampton Roads assessment for high-volatile type-A (HVA) coking coal is at $213.50/t, while the high-volatile type B (HVB) index is at $171.50/t, both down by $2.50/t.

Trading activity has been fairly muted in the past week, with US market participants absent for several days for the Thanksgiving holiday, while well-covered European buyers have been in no rush to buy while steel and iron ore prices drop.

That said, the coking coal market has so far shown little reaction to those declines, with persisting global coking coal supply concerns supporting price expectations. Vessel queues at Queensland's Dalrymple Bay Coal Terminal (DBCT) hit 49 yesterday, and queues are also growing at other Queensland coal ports.

The Argus daily fob Australia assessment for premium hard low-volatile coking coal is at $222.50/t today, down on the week by just $1.85/t, while US high-vol price movements have also been minimal. "High-vol supply is just so tight right now, it can't reasonably move much," a sell-side market participant said.

The paper market has reacted more sharply to steep declines in steel and iron ore prices than the physical coking coal market. "A lot of people with long positions are looking to readjust," a European market participant said, pointing to an uptick in activity for the first quarter, and a $17/t drop in the December contract in the past two weeks.

Seasonality is also playing a part, with winter weather setting in and the potential for cyclone-related Australian supply disruptions in early-2019. "If steel and iron ore were coming off like this at a different time of the year, coking coal might react a bit more. But as it is, people are confident about supply concerns keeping prices quite pretty firm," the European market participant added.

US suppliers note varying levels of availability remaining for the first quarter of 2019, with some largely sold out and several buyers likewise already fairly well covered for the period. But some business is still being done. A southern European steelmaker was seen showing interest in some HVA material for the first quarter, from a supplier looking to place around 25,000-30,000/t month to either southern Europe or South America from the mine in question.

Elsewhere, some 10,000t clips of HVB are still changing hands fairly regularly, sources said. And while US steelmakers are for the most part covered for 2019, some domestic tonnage is still being allocated and priced for next year, market participants confirmed.

Coking coal stocks at Amsterdam-Rotterdam-Antwerp (ARA) remain high. Total coal stocks at Rotterdam's EMO terminal have risen to 4mn t from 3.8mn t a week ago. Port authorities indicate that around 15pc of this – or 0.6mn t – is typically coking coal.

Coal stocks at Amsterdam's OBA terminal – all of which is thermal – are flat on a week ago at 2.25mn t. Coal stocks at Ovet total 645,000t, up from 505,000t a week ago – of which around 70pc or 451,500t is estimated to be coking coal based on typical ratios.

Rotterdam's EBS terminal has 250,000t stockpiled, of which around 15pc – or 44,000t – is typically coking coal, according to port authorities.

Rhine water levels at the key measuring point of Kaub remain so low as to disrupt barging, measured at just 29cm at 1pm local time today.