Polish coking coal imports surge despite demand easing

Imports of coking coal to Polish ports have continued to rise since mid-May amid tight domestic supply of certain grades, despite regional steel and metallurgical coke output softening this year.

Vessels with capacity to carry up to 730,000t of coking coal in total have been discharged at the Polish ports of Gdansk, Gdynia and Swinoujscie since the start of May, Polish shipping agents told Argus.

The actual import figure since early May — which represents volumes destined for end-users in Poland, the Czech Republic and Slovakia — was slightly lower than 730,000t as some of the vessels are likely to have offloaded material in Rotterdam before reaching Poland, the agents said.

To put this volume in context, data from government agency ARP show Poland imported 3.5mn t of coking coal in 2018, up from 2.2mn t in 2016 (see chart).

Overall, imports of coking coal at these key Polish ports in May were at their highest level since March, when they received around 660,000t, according to agents' vessel-tracking data.

The ports of Gdansk and Gdynia receive the most cargoes, with bottlenecks emerging and port storage capacity currently stretched.

At Gdansk, four coking coal vessels capable of carrying up to 465,000t in total have been discharged since early May. Three of these arrived since a one-week maintenance shutdown of the port's coal terminal in mid-May. Three were coming from Australia while the fourth was a 75,000t shipment from Russia.

A source at Gdansk port said increased imports in recent weeks have led to high port stocks, with drawdown slow as regional production of met coke and steel falls. According to some estimates, there is 600,000t of coking coal in Gdansk port waiting to be railed to customers, and outgoing trains are less frequent than usual because large end-users are in no hurry to replenish their inventories.

Gdynia port's coking coal import and storage facilities have also been used to full capacity in the past two weeks, agents said.

Most coking coal received last month came from Australia but there have also been arrivals from the US, Canada, Russia and Mozambique. ArcelorMittal remains the largest recipient, but there are also cargoes heading to end-users in the Czech Republic and Slovakia, including Moravia Steel, US Steel Kosice and Czech mining company OKD.

Data from the shipping agents is corroborated by Polish government statistics, which also confirm rising coking coal imports. Poland imported almost 920,000t of coking coal in the first quarter of 2019, up by 12pc from a year earlier, according to ARP. More than half of that total came from Australia, and the US was the second-largest supplier.

Strong imports come as stocks of coking coal in Polish coal mines have been falling following earthquakes in Jastrzebska Spolka Weglowa (JSW) and Kompania Weglowa mines in January. According to ARP, stocks of coking coal in Polish coal mines halved during first quarter to 165,000t at the end of March. For comparison Polish mines had more than 700,000t of coking coal in stocks in mid-2018, ARP said.

A source at ArcelorMittal in Poland told Argus that imports of coking coal may ease later this year as Polish coal production has stabilised since some early-2019 disruptions, noting that domestic deliveries are in line with ordered volumes. The region's uncertain steel and coke market outlook may also curb imports.

Polish steel output fell by more than 5pc year on year to 3.38mn t in January-April, according to government agency GUS.

Met coke output also fell by 5pc on the year to just over 3mn t in January-April. The steel output outlook is weak as the largest producer in the country ArcelorMittal last month said it planned to reduce its steel production capacity in Poland by one third from September because of the temporary shutdown of its blast furnace in Krakow. ArcelorMittal said that it would restart the furnace only when market conditions improve. The company produced 5.2mn t of crude steel in Poland in 2018.

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