Atlantic coking coal: Prices rise again

US coking coal prices rose further today as supply tensions continued to drive up offer levels and sellers' price expectations, while buyers with spot demand and limited options face growing pressure to accept higher prices.

The Argus-assessed US low-volatile coking coal price moved up by $2/t to $161/t fob Hampton Roads today, driven by suppliers pushing up cfr China offers in a tight market and by strong Chinese demand for low-vol alternatives to Australian coals. High-volatility coal prices are being buoyed by the continued lack of spot availability, with high-vol A and B coals assessed 50¢/t higher today at $158/t fob Hampton Roads and $142/t fob Hampton Roads, respectively.

The Atlantic low-vol coal segment remains squeezed, pressured by Bluestone's loading delays at Norfolk and expectations of lower spot volumes on offer for loading in the second half of June and July as the strike at Warrior Met Coal has lasted almost a month.

Warrior has not delayed any scheduled deliveries and was understood to have accumulated significant stocks at the port before the strikes. But the United Mine Workers of America said today that its "members are looking for a dramatically better proposal than the one put forward last time" and no talks with Warrior are in progress.

A cargo of July-loading Oak Grove has been offered at $235/t cfr China, with market expectations that it will settle no lower than $230/t cfr China.

"There are not many US miners with low-vol availability who can load a full cargo to China, and this has certainly lent support to cfr China offers," one trader said. Miners and traders that typically offer smaller lots of low-vol coals have also received spot interest from buyers seeking to replace cargoes affected by loading delays. But few have availability in June or even July.

"US miners have very little capacity to drive up production," said one miner that is sold out into the third quarter. "Some mines are doing extra shifts to maximise what they can, but it will not change volumes significantly — by 25,000 t/month maybe," the miner added. A major US high-vol producer is notionally indicating $158-160/t for high-vol A coals but has no ready spot volumes to offer.

"A few European mills are looking for cargoes, but European spot demand is low in general," a trader said. As well as large steelmakers with regular spot requirements, there are occasional purchases by smaller mills. One European mill with all its blast furnaces running at almost full capacity is covered by long-term contract deliveries but secured an Australian premium low-vol spot cargo in January and is considering the same in the third quarter.

While US coals are in tight supply, Australian premium low-vol coals are available even if deliveries to European mills are affected by supply disruptions. "If you want Australian coal and book it in time you can definitely get it," a European mill said.