Atlantic coking coal: Market at impasse

US coking coal prices have stayed flat today, with scant buying interest in Europe and US miners largely occupied by domestic contract negotiations or refusing to accept current market indications, keeping spot trades from concluding.

While offers have risen significantly over the past two weeks, with miners citing limited supplies and growing fourth-quarter demand, there remains little to no fresh spot trades reported at the higher price levels.

The Argus daily fob Hampton Roads assessment for low-vol coking coal rose to $114.50/t yesterday on the back of miners' insistence that they will decline to sell below $120/t fob Hampton Roads, despite the absence of spot interest in Europe. But the gap with fob Australian premium low-volatile assessed today at $129.70/t has widened significantly to what was last seen in late March. The high-volatile A price is unchanged at $116/t fob Hampton Roads today, as is the high-volatile B price is at $103/t.

"We're not seeing US prices move as aggressively (as the Australian prices) yet but it will start to come," said a miner who is optimistic that US prices will strengthen further and that the standoff on prices will be short lived. "Partly due to little trade as Europe is still weak but also due to the ongoing domestic settlements, no one wants to blink," the miner added.

Signs of recovery in Europe continue to emerge with ArcelorMittal restarting blast furnace 1 at its Fos-sur-Mer works in France, which was idled in March. The company had said that it would restart the furnace in August, but decided not to given the weak steel market. The company has decided it will restart the unit since then because of the rapid increase in steel prices and demand. The Columbia — a Panamax vessel — has delivered what is likely to be a coking coal cargo from Norfolk to Fos-sur-Mer on 16 September.

Indian mills continue to show an interest in US coals, but sellers and buyers are yet to agree on prices, miners say. Price discussions are around September averages for deliveries in the fourth quarter, but some miners are concluding at levels closer to forward curve levels. At least one miner has made spot sales to European, South American and Japanese mills for the fourth quarter, as some mills return to the market.

The delivered Rotterdam price rose by $10.25/t to $127.50/t, in part driven by the rise in low-vol prices and and a recent hike in the US east coast to Rotterdam coal Panamax rate, which was pushed up $2.75/t to $13/t by a shortage of vessels in the US east coast. But the shortage is limited to prompt loading vessels and could fall again once vessels from the US Gulf start to ballast up.

There continues to be interest in the Atlantic market in US met coke, while domestic supplies are heard to be tightening and offers are in excess of $270/t, said one trader. Colombian met coke offers are in the $240-245/t fob range but spot availability is largely limited to late in the fourth quarter. The mid-vol fob Colombia is assessed at $110.25/t today, up by $8.95/t on the week, supported by supply tightness and improved demand in South America.