Prices for ex-Australia premium hard coking coal (PHCC) have declined in the latest deal done on Friday, March 1, signaling that, after some pause, sellers have had to cut prices to sign a deal. However, the latest bids below $300/mt FOB seen on the GlobalCoal platform and directly from end-users are unlikely to work out in the near future, market sources believe, partly as demand may gradually improve in March, preventing prices from recording sharp further declines.
A deal for 35,000 mt of mid-volatile Goonyella PHCC was done at $307/mt FOB for April laycan, down by $7/mt from the previous deal a week earlier and down $5.5/mt from the SteelOrbis daily reference price on the previous trading day. The price was not a surprise since, even though suppliers’ price indications were at $310-315/mt FOB late last week, buyers were insisting on below $310/mt FOB. Trading activity was relatively slow last week and most deals were index-based. The number of offers in the spot market has remained firm, which has continued to put pressure on sentiments.
At the same time, the latest bids from end-users in India for mid-volatile PHCC have been reported at $285-290/mt FOB, which, however, has been assessed as not possible for suppliers any time soon. “It's ridiculous to go below $290/mt FOB for sellers, because now DCE futures are [equivalent] to $300/mt FOB,” a trader said.
Moreover, there are signs of a tentative demand revival. On Monday, March 4, one Chinese mill purchased premium low-volatile Australian material from the leading trading company with the FOB price being index-linked. Market sources believe that, if Chinese importers keep buying Australian coking coal, “spot availability will be tight,” as one source said.