Prices for ex-Australia premium hard coking coal (PHCC) have been relatively stable this week and, even though one deal was done at a slightly lower level this week, the outlook is positive and prices may reach $260/mt FOB amid the lower supply for July shipment coal.
A contract for 80,000 mt of ex-Australia German Creek low-volatile PHCC was done at $254/mt FOB yesterday, June 12, with the buyer being a Japanese mill. Last week, mid-volatile material from a major miner was sold at $256.2/mt FOB. However, market participants do not consider this as a firm sign of a price correction. German Creek low-volatile PHCC has “high phosphorus and can be priced $2-3/mt lower,” a trader said. Another source said that some lower-priced deals are possible in the near future if the seller needs to push the rest of June shipment cargoes (which are almost all sold out) or if there are some quality exemptions. Otherwise, the outlook is still positive.
Both miners and the transportation system in Australia will face maintenance works, which will cut supply for July laycan cargoes. In particular, the Blackwater coal rail system and Newcastle and Gladstone ports will carry out repair works.
Nevertheless, the price increases are not expected to be significant as “they are already priced relatively high,” while demand has not seen an improvement, from India in particular. Moreover, the mood in China has worsened even further. Producers have started to accept the second local coke price reduction in China from today, with a drop of RMB 50/mt.