Atlantic coking coal: Prices remain steady

US coking coal prices held steady early this week with improved third quarter buying interest and greater optimism among US mining firms supporting prices despite uncertainty over China's import policies leading to weakness in the Asia-Pacific market.

The daily Argus assessed low volatile price is unchanged at $107.50/t fob Hampton Roads, as are the high-volatile A and high-volatile B coal prices, at $113/t fob Hampton Roads and $107/t fob Hampton Roads respectively.

A Brazilian mill closed a tender today seeking a 25,000t shipment of mid-volatile coal for delivery in early September and two 45,000t shipments of low fluidity high-volatile coals to be delivered in September and November. While there are growing concerns in the market over the rising Covid-19 infection levels in Brazil, third and even fourth quarter buying interest from the country's two major mills has offered some assurance to suppliers.

Sentiment among US mining firms has also been supported by recovering domestic steel output, with steel utilisation rates rising to 55.4pc last week, from 54.6pc the week before, data from the American Iron and Steel Institute show. But the US has operated at under 70pc utilisation for the last 13 weeks, down from pre-pandemic utilisation rates of above 80pc. Rising Covid-19 cases in a handful of southern and western US states has no doubt dampened optimism this week.

While uncertainty over China's restrictions on Australian coal exports are weighing on prices in Asia-Pacific, US mining firms are hopeful that discussions for the delivery of term contracted coking coal have restarted with mills in Japan and South Korea. A US firm shipping a spot cargo of high volatile sold on a cfr basis to China is optimistic that China will emerge as a viable destination for US coals on the back of the phase one trade agreement agreed in January. This is despite recent tensions over calls by the US for an independent investigation into the origins of the Covid-19 outbreak and China's handling of it.

Coal exports out of Hampton Roads, Virginia, fell to their lowest in nearly three and a half years in May, with the terminals handling just over 2.1mn short tons (1.91mn metric tonnes) of coal last month, down from 2.91mn st a year earlier, data from the Virginia Maritime Association show. The terminals predominantly ship coking coal.

The cif Rotterdam price has edged up $1/t to $118.50/t, on the back of US low volatile prices firming in the past week and rising freight rates.

The Colombian mid-volatile price is largely stable at $97.75/t fob but trade is limited. " Any coking coal opportunity in the Atlantic has been priced too low to attract interest from our suppliers in Colombia," one Europe-based trader said.