Ex-Australia coking coal prices relatively stable, but bullishness emerges after output cuts rumored in China

Thursday, 22 February 2024 13:53:34 (GMT+3)   |   Istanbul
       

This week has been relatively stable in the ex-Australia premium hard coking coal (PHCC) market with only a small decline seen in rare deals. However, from Wednesday, February 21, a bullish mood has emerged in the market, following active discussions that major Chinese coal miners will cut outputs in the first half this year.

The SteelOrbis reference price has settled at $314/mt FOB, down by $1/mt from the level late last week, as a deal for 40,000 mt of ex-Australia mid-volatile Goonyella PHCC was done at this level early in the week. Another contract for the same grade and volume was done on Thursday at the same price level. Bids at the GlobalCoal platform for March laycan low-volatile PHCC have been at $315/mt FOB, but for April they are still low at not above $300/mt FOB. “China was not buying [Australian] import coal for weeks, but now things may change as production cuts [in China] look serious,” a source said.

According to market reports, the local government of Shanxi Province, which is the main coking coal production hub in China, has ordered major miners to cut production for safety seasons after the record results of 2023. Though there have been no official announcements, market sources are assessing the impact on first half coking coal production at 5-10 million mt, with safety checks going to last until the end of May. However, some market sources said that the drop in coking coal output could be bigger and reach 20 million mt in 2024.

Following these developments, coking coal futures at Dalian Commodity Exchange surged by the maximum limit on February 21, by eight percent, and by 4.1 percent today, February 22.

Ex-Russia PCI prices have also been on the rise in China. The last deal for ex-Russia PCI was done at $145/mt CFR early in the week, up by $3/mt from the pre-holiday level. Also, new offers are $147-149/mt CFR China.


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