EU hikes imports of US coking coal in November

EU imports of US coking coal jumped in November, bringing the US almost level with Australia as a supplier to the region for the full January-November period, according to Eurostat data.

The EU imported almost 1.4mn t of US coking coal in November, up by 116.2pc from October and a 21.1pc increase from a year earlier (see table).

The month-on-month increase may in part have been caused by disruptions in the previous weeks, with US exports having dropped in September as Hurricane Florence bore down on the US east coast, prompting temporary port closures. The hurricane was not as disruptive as some had feared and operations returned to normal fairly quickly, but the port closures put extra strain on an already overstretched infrastructure network.

The time lag between vessels departing Hampton Roads and arriving in Europe means that October's return to normal export operations may in part be reflected in November arrivals data.

Analysed in its wider context, the latest Eurostat data confirm shifting procurement patterns in the past two years, as European steelmakers reduced their exposure to Australian supply volatility by diversifying their sourcing, while also taking advantage of the US production ramp-up as strengthening market conditions enabled the restart of several idled US projects.

The EU imported 981,649t of Australian coking coal in November, down by 5.2pc from October.

European market participants say there is a limit to how much they would consider cutting back on Australian coking coal. Steelmakers are reluctant to ever tamper much with their blends, particularly where older facilities are concerned, and the metallurgical properties of Australian premium low-vols are hard to match.

US coals have reasserted their presence in Europe thanks to a combination of competitive pricing, shorter delivery periods and the diverse usage of US high-vols — popular among many end-users globally because of their blending properties. As such, they compete for a slightly different market share to Australia's premium grades, denoting a limit to how far US exports are likely to infringe on Australian sales into Europe.

Argus last assessed fob Hampton Roads prices for low-volatile and high-volatile type B coking coal yesterday at $183.50/t and $156.50/t, respectively. Today's daily fob Australia assessment for premium hard low-volatile coking coal is at $189.20/t, down by 20c/t from yesterday.

In all, the EU imported 11.8mn t of coking coal from Australia and 11.3mn t from the US in January-November. The narrowing of the gap between those two volumes marks a return to a near-balance that was last seen in 2014 for the January-November period (see chart). The EU imported 13.2mn t of Australian coking coal and 13mn t of US coking coal in the first 11 months of 2014.

The EU's move to diversify its sourcing is also reflected in other origins. Imports from Russia slipped in November, but overall January-November volumes were up on the year by 14.3pc at 6.2mn t. Imports from Mozambique — a country lately focused largely on sales to Asia — jumped by 114.2pc to 1.8mn t in January-November, with central Europe taking a significant portion.

Imports from Canada were down on the year by 11.5pc in January-November at 2.7m t. But in November itself, volumes rose by 70pc month on month to 333,904.

Imports of Colombian coking coal are notable for their steep drop, as the country places a growing focus on Asian markets, and on exporting metallurgical coke rather than coking coal. The EU received just 21,400t from Colombia in November, according to Eurostat.