Prices for ex-Australia premium hard coking coal (PHCC) have unexpectedly rebounded early this week after a deal done on Tuesday, May 21, at almost $250/mt FOB. However, the deal is for July laycan, for when supply is expected to be reduced, while sentiment and bids for cargoes for June laycan are still weak.
A contract for 40,000 mt of branded PHCC from Australia has been signed at $248/mt FOB for July laycan at GlobalCoal, up from a deal done at $238/mt FOB for similar material last Wednesday. The higher deal price is “probably betting on tighter availability for July. There is a lot of talk about maintenance by the miners during the month,” a trading source said. But “June seems oversupplied,” another source said, adding that there is a lack of bids for June laycan and they are hardly above $238/mt FOB. In any case, this is a positive price movement versus previous bids at $210-220/mt FOB for June shipment at GlobalCoal last week, even though demand from most major markets has been limited.
Moreover, there was a deal reported in the Chinese market late last week-early this week for 75,000 mt of ex-US Blue Creek PHCC at $258/mt CFR for early June shipment. The price is also above last week’s reference at $250/mt CFR and it is mainly due to the relatively close shipment time and the need for high-grade material. In general, bids for ex-Australia PHCC have been assessed at $240/mt FOB at the highest. The local market in China is unlikely to support any sharp increases in import coking coal prices. “The first round of coke price cuts [by RMB 110/mt] has been confirmed today, and a second round is expected next week,” a China-based source said, while local coke prices were stable last week.
“In the short term, we see China’s coking coal prices are weakening, while India’s prices to return to around $250/mt CFR amid likely stockpile bargains,” another Singapore-based trading source said.