Atlantic coking coal: Growing 4Q interest buoys prices

US coking coal prices edged up today amid increasing demand in Europe for the fourth quarter and tightening supplies in the US, where mining firms have their eye on domestic negotiations.

The Argus daily fob Hampton Roads assessment for low-volatile coking coal rose by $1/t to $108/t today, and a sharp rise in Asia-Pacific prices will no doubt support sentiment going forward. The high-volatile A price is unchanged at $110.50/t today, after rising by $1.50/t yesterday, as limited supplies have pushed any available offers to $110-111/t fob Hampton Roads. The high-volatile B price increased by $1/t to $100/t, with little expectation of previous discounting still being on offer.

A Turkish mill is in the market for two mid-vol or mid-vol blend cargoes for October-November loading, having extended its tender that was meant to close last week. A Brazilian tender for semi-soft high-volatile cargoes for shipment next year has gone to a second round of offers, with the mill now also asking for low-vol cargoes, while another Brazilian mill has extended its tender for several cargoes and asked for price revisions.

The hike in US steam coal prices in the first half of September has reduced the willingness of mining firms to offer discounts on their high-vol B coals just to shift inventories, market participants said. "The miners would rather deliver their high ash coals into the thermal market than offer it at a loss as high-vol B coals," one trader said. "The high-vol B deal that concluded below $90/t last week is not repeatable," he added.

At least one US low-vol coking coal producer is not offering any spot material at current price levels. "We're not planning to produce anything beyond our contracted tonnes in October. It would take an increase to around $120/t fob Hampton Roads for us to do that," a US miner said.

The attention on domestic price negotiations and a continued rise in US steel prices have contributed to miners' confidence. US Steel increased flat-rolled prices by $60/st yesterday, targeting minimum pricing of $600/st for hot-rolled coil (HRC) and $800/st for cold-rolled coil (CRC) and hot-dipped galvanised (HDG) products.

Prospects for the fourth quarter in Europe are still looking positive, with HRC prices steadily edging up towards mill targets. The Argus daily benchmark northwest European HRC index increased by €2.75/t today to €479/t ex-works, not far off the €482.25/t on 13 March. But the strength in iron ore prices is no doubt limiting mills in what they can pay for coking coal. "European mills are trying to keep under the radar with their Q4 interests," one participant said.

Met coke supplies remain tight, with one Colombian producer not expecting to have spot availability until December. Disruptions to mine operations because of Covid-19 have impacted output and inventories significantly. "Enquiries from European mills for Russian met coke have picked up, and there is a huge shortage of coke," a trader said. "European mills can't normally consume low-CSR Russian coke, but they are in the market," he added.

The mid-vol fob Colombia price rose by $5/t on the week to $101.30/t, supported by supply tightness and the overall strengthening in seaborne prices. The Colombian mid-vol price was last above $100/t in late April, at $112.20/t fob.

Volumes and prices of Russian coking coal sales to China continue to increase, participants said. "Chinese buyers don't know what to do under these import restrictions and are interested in securing tonnes that are available and have short delivery times, for specific qualities," a trader said.