Atlantic coking coal: More 3Q recovery signs emerge

US coking coal prices have held steady ahead of recent buyer enquiries converting to purchases for later this quarter.

The daily Argus-assessed low vol price is flat at $107.50/t fob Hampton Roads, as were high-volatile A and high-volatile B prices at $113.50/t fob Hampton Roads and $107.50/t fob Hampton Roads, respectively.

A Turkish mill was heard to have issued a tender yesterday seeking a cargo of high vol coals, two cargoes of mid-vol coals and one cargo of low vol coals for loading in September, to be delivered between late September and early October. The workable price in Turkey is around $115-116/t delivered for mid-vol coals, one Turkish trader said.

Signs of potential demand from Brazil have continued to emerge this week. Blast Furnace number 2 at steelmaker ArcelorMittal's Tubarao plant in Brazil's Espirito Santo state will be blown in on 26 July. The blast furnace, with a 1.2mn t/yr capacity, was taken off line at the end of 2019 for a revamp but remained closed throughout the first half of 2020 because of Covid-19 disruptions in the international steel markets.

Sentiment in Europe continues to be one of slow recovery, with mills hopeful that changes to steel import safeguard quotas imposed on 1 July will offer support amid the pressures of narrow steel margins. A leading northwest European steelmaker has followed ArcelorMittal with plans to increase its hot-rolled coil (HRC) offer to €450/t ex-works. The mill is informing customers of lead times stretching to September based on its reduced production and is holding some supply for September to secure higher prices. The rises are needed to move away from unsustainable prices, and on the back of firmer demand and high costs, the company told buyers.

A US miner said they were on the cusp of a transaction for a low-vol cargo to a large, partly state-owned Chinese steel mill, at 102pc of index levels. "I really didn't expect to be in discussions with China this calendar year," the miner said. "But there's still no clarity as to how these import restrictions work, and I think that may be by design. I think the 20 biggest mills all have the ability to import, but I don't know how it works."

India has remained a difficult export destination for US mining firms this week. One said talks with an Indian mill last week had halted because of a gulf in price expectations on each side. The Indian mill had expected $119-120/t cfr India for a grade of US coal comparable with Australian premium low-vol. South Korean and Japanese coking coal demand is recovering compared with the very low levels in the second quarter. "We normally ship a total of 300,000-400,000t to Japan and South Korea per quarter, but the figure in the second quarter was zero," a US miner said. "In the third quarter it looks like it'll actually be more than normal because they have some catching up to do now. I don't think the fourth quarter will be as strong."

At least two mining firms have halted metallurgical operations, although few cuts have been publicly announced in the sector. Consol's Enlow Fork Mine, where 233 employees have been laid off, mainly produces thermal coal. Miners are building up high inventories after a weak second quarter in terms of volumes as well as pricing, but producers are hanging back from making aggressive offers of the kind that were heard in April and May now that the forward curve is in contango. "Ten dollars makes a big difference," one miner said.