Australian coking coal prices continued to rise amid shortages of supply. On January 24'22, Australian premium HCC FOB prices were up $25/tonne at $444.50/t (t).
Demand for Australian coking coal is high due to the restocking needs of end users in the ex-Chinese markets. This price increase was supported not only by demand but also by supply constraints.
Limited availability of spot premium hard coking coal from major miners due to Covid restrictions and subsequent labor issues, coupled with more-than-average precipitation are driving prices up.
Amid supply problems, Australian miners are heard to be revising their production targets for FY'22 ending 30 June'22. BHP Billiton last week reduced its coking coal production guideline for FY'22 (July 21-June'22) from 39-44 mnt to 38-41 mt (mnt). South32, another miner, reported production cuts for the December quarter, down 15% year-on-year and 24% in the previous quarter.
The USA coking coal prices up $10/ton
High volume HCC coking coal imported from the US on January 24'22 was at $10/tonne to $400/ton. Although prices have increased on a weekly basis, this increase is not in line with the rise in Australian coking coal prices. This is because demand from China, the largest coking coal export destination, stabilized ahead of the winter holidays that began on 31 January'22. Also, the Curtis Bay coal terminal, which closed last month due to an explosion, has reopened.
Indian buyers are investigating coking coal cargoes
Indian steelmakers have very limited stocks of coking coal, which is expected to last until mid-February. With very limited spot cargoes in the market, Indian steelmakers will have to reduce their usage levels. As a result, they would have to pass on the increased raw material costs to the final consumers.
In the near-term, the USA coking coal prices will see some stability next week and 10 days before the Chinese Lunar New Year holidays, while Australian coking coal prices may find support due to demand from ex-Chinese markets.
In the medium term, coking coal prices are expected to remain high until March'22 due to supply problems.
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