Atlantic coking coal: US prices tick higher

US coking coal prices crept up again in the past week as infrastructure networks continued to work through the post-hurricane backlog, while European mills took stock of rapidly rising fob Australia prices.

The Argus weekly fob Hampton Roads assessment for low-volatile coking coal is at $195/t, up by $5/t week on week. The weekly assessment for high-volatile type A (HVA) coking coal has risen by $3/t to $203/t fob while the high-volatile type B (HVB) assessment is up by $2.50/t at $168.50/t fob.

US producers are largely sold out for the remainder of 2018 with only occasional cargoes available, while some traders on the sell-side describe only slightly higher availability than that.

Discussions are underway with European, South American and Indian buyers for medium-term US coking coal supply contracts stretching into 2019, according to several market participants, who describe a mix of fixed price and index-linked negotiations.

Last week's fire at Peabody Energy's North Goonyella coking coal mine in Queensland has caused fob Australia prices to jump, with the Argus daily fob Australia assessment for premium hard low-volatile coking coal gaining a further $8.45/t today to $212.85/t – up by $7.85/t from a week ago.

On a delivered basis, Australian premium hard low-volatile coking coal is pricing into Rotterdam at $225.75/t based on a $12.90/t Capesize freight rate – up from $217.40/t cif a week ago. By comparison, US low-volatile coking coal into Rotterdam is pricing at around $208.50/t cif, factoring in Panamax freight rates at $13.50/t.

The North Goonyella fire is hitting seaborne sentiment and potentially encouraging suppliers of US coal to push for higher prices – although some Europeans question how long-term the impact on fob Australia prices will be. Market participants do not describe a direct impact on US coking coal prices, which are being shaped more heavily by their own fundamentals – tight supply, robust demand and the impact of Hurricane Florence on port congestion and demurrage costs.

A trader noted that some buyers are struggling to get enough material from countries they traditionally buy from, as demand outpaces supply. As a result, those buyers are turning to US coking coal as an alternative, putting additional strain on an already-tight US supply dynamic.

That said, while fundamentals are encouraging US suppliers to test the market with higher offers, some Europeans caution that top-end price levels are not being accepted by buyers, and some market participants expect fob Hampton Roads prices to soon correct back down towards pre-hurricane levels.