Atlantic coking coal: Prices flat on limited 3Q buying

While a string of plant restarts for automakers have taken place or are planned across Europe, the overall outlook for coking coal demand in the region for the third quarter remains largely muted. But prices have continued to hold up as US producers sitting on smaller inventories compared with earlier this year appear less ready to offer heavy discounts.

The Argus daily assessed US low-volatile fob Hampton Roads is unchanged today at $110/t, as were the high-volatile A price at $114/t fob Hampton Roads and high-volatile B price at $106/t fob Hampton Roads.

"We don't expect a quick recovery in hot metal demand and have even reduced our coke plant output for the third quarter from 80pc to 70pc," said one European mill source. "I certainly don't hear of any mills even thinking about restarting idled blast furnaces this year."

The temporary mine closures earlier this year due to safety concerns over Covid-19 have taken the pressure of high inventories off some US miners in recent weeks. It remains to be seen if further pockets of spot buying will emerge in Europe for the rest of the third quarter or if US miners might even start to encounter competition from Australian producers facing potential restrictions on exports to China.

The tightening of Chinese import restrictions on Australian coal has caused some confusion among market participants. "It's not good for the market, I see it as a paradox. The less they have in quotas, the more buyers will want the high-grade Australian coals. China wants good materials, and quota reductions normally work against Russian grades," said a trader.

Some US suppliers have expressed fears that Chinese import restrictions on Australian coking coal could lead to Australian sellers taking larger shares of other markets outside of China, although some are doubtful. "China and the rest of the world are separate markets," said a Turkish mill. "We hope that there'll be more Australian tonnes in the market, but it would have to be at a lower price. Australian prices are currently too high for Europe, but it also depends on your requirements."

Suppliers have also noted that while there were a couple of enquiries in the last few weeks from European mills, it might have been a price-checking exercise for some.

Scepticism remains in the market despite discussions being heard between miners and mills. "Europe is quiet because mills are taking the deliveries they delayed last month," said a European trader.

A mill seeking third-quarter PCI is in discussions with a Russian producer for PCI in the region of $60/t cif Europe, in line with the Argus assessment of $61.30/t cif Rotterdam and $60.30/t cif Rotterdam on Tuesday for low-vol and mid-vol PCI, respectively.

A cargo of Colombian coke was heard traded at $190/t cif Rotterdam and is en route for June delivery.