Atlantic coking coal: Market at standstill

US coking coal prices have ended the week slightly lower as Chinese buyers continue to hold back buying amid softening domestic met coke and coking coal prices, while US suppliers are reluctant to accept lower prices as restrictions remain on Australian imports in China.

The Argus-assessed US low-volatile coking coal price moved down by $1/t to $160/t amid strong availability of March-loading cargoes, while Chinese buyers that have been behind higher US prices since last year are taking stock of lower domestic prices. High-volatile A and high-volatile B prices edged down by 50¢/t to $156/t and $137.50/t, respectively, as spot trade slows but is still supported by the absence of spot availability until May or even June.

Chinese buyers have not been actively requesting premium low-volatile cargoes since the lunar new year holiday, a supplier said, adding that June-loading premium low-volatile cargoes will probably be sold lower than recent deals on a cfr China basis. "We are sold out until May," he said.

"US mining firms will accept fob equivalent bids in the low $160s and are likely to consider the high $150s as well," a trading company said. "But there is just a standoff in the market. Chinese buyers do not want to overpay, with domestic prices falling, and US mining companies do not want to drop and undersell."

Cfr China offers for March-loading cargoes — including a blended mid- to high-volatile Jasper coal at $211/t, a cargo of Appalachian hard coking coal at $216/t and a cargo of Pardee coal at $213/t — remain available.

While Australia premium low-volatile coking coal prices have fallen further today, to $122.75/t fob Australia, extending the arbitrage for US low-volatile coal, high freight rates and longer voyages continue to maintain some appetite for US low-volatile coal in the Atlantic.

Two major European mills and two major Brazilian mills have made spot requests for US low-volatile cargoes, while availability remains limited for April and May. "There are one or two trains available, I think," a trading firm said. "Small parcels may be available for June," another trading company said.

The high-volatile segment continues to be tight, particularly as the US domestic steel market stays bullish and Canadian seasonal demand returns to the market. "I do not expect any sudden supply response from mining companies and any customer with option tonnes is exercising them," a high-volatile coal producer said.

The European met coke market remains supported by low availability despite recent price cuts in the Chinese domestic market. "It is hard to find material at reasonable prices in Europe at the moment," a buyer said. The same buyer resold a 12,000t eastern European cargo of 62 CSR met coke for $390/t cif Amsterdam-Rotterdam-Antwerp. The cargo originally was bought a month ago for use in the buyer's own blast furnace and will load next week.

Tightness in the Atlantic coke market also continues to limit the availability of Colombian coking coal cargoes. "We are struggling to get a cargo shipped on our last contract," a European buyer said, adding that Colombian suppliers are reluctant to perform on cheaper term volumes for export and are continually postponing.