Wednesday, January 23, 2019

Seaborne prices rise further on improved sentiment

Higher bids amid improved sentiment among seaborne coking coal market participants culminated in higher spot prices on Wednesday January 23.

A February-laycan cargo of a top Australian brand was sold at $198.50 per tonne cfr China to a northern Chinese end user, various sources said.

A cargo of branded materials, scheduled for loading in March, also changed hands at $197 per tonne fob Australia on trading platform Global Coal during the day.

Bids for a lower-ranked premium hard coking coal were also heard at $186 per tonne fob Australia and $188-189 per tonne cfr China, a Chinese trader told Fastmarkets.

But the number of offers appears to have fallen amid an uptrend in the market this week, a second Chinese trader said.

“We have a bullish outlook for the market after the Chinese New Year, and this week’s transactions form an ascending pattern. Most buyers are done with procurement anyway so we will just hold off from selling until mid-February,” he added.

China will observe a public holiday over February 4-10.

In the coke market, calls proposing an increase of 100 yuan per tonne emerged in the market but end users quashed the suggestion, sources said. 

“Mills argued that they still have a moderately high amount of coke in their inventories and there have been no issues with [coke] supply,” a coke plant source in Hebei province said.

The Dalian Commodity Exchange’s most-traded May coking coal futures contract closed at 1,232 yuan ($181) per tonne on Wednesday, up 16.50 yuan per tonne from a day earlier.

The most-traded May coke contract closed at 2,043 yuan per tonne, up 24 yuan per tonne for the day.

Fastmarkets MB’s cfr China Premium Hard Coking Coal Index rose $0.55 per tonne to $196.67 per tonne while its hard coking coal index gained $1.63 per tonne to $184.02 per tonne.

The fob Australia premium hard coking coal index is up $2.85 per tonne, at $196.96 per tonne, while the hard coking coal equivalent increased by $4.53 per tonne to $176.68 per tonne.

The low-vol pulverized coal injection indices were flat, at $137.44 per tonne cfr China and $125.13 per tonne fob Australia.

Tuesday, January 22, 2019

Unexpected transaction boosts cfr China prices

A transaction in the seaborne coking coal market on Tuesday January 22 took participants by surprise, having been concluded at a higher price than expected, in contrast with prevailing sentiment.


A February-laycan cargo of premium mid-vol hard coking coal was sold at around $195-196 per tonne cfr China to an end user in southern China, according to various sources. 

This is around $4 per tonne higher than the last transaction a week ago involving similar materials.

“When a cargo of premium mid-vol hard coking coal cargo was traded at $185 per tonne cfr China, I received a few inquiries from various end users. But the market is quiet again after similar materials were traded $4-5 per tonne higher,” a Beijing-based trader said earlier on Tuesday, referring to the transaction last week.

There were some 2.1 million tonnes of imported coking coal at Tangshan’s Port of Jingtang in Hebei province on Tuesday, about the same level of inventories as a week ago, he added.

A second trader, based in Tangshan, said that he would take a wait-and-see approach until mid-February.

“There will be a clearer market direction then, depending on the level of steel inventories. If it exceeds market expectations, then coking coal prices will likely weaken further,” he said.

BHP said it produced 10 million tonnes of metallurgical coal in the half year to December, up 2% compared with the same period a year earlier. The miner attributed the increase to record production at its South Walker Creek mine and higher wash-plant throughput at its Poitrel mine following the purchase of the Red Mountain processing facility.

It is maintaining its met coal production guidance for its 2019 financial year ending June 30 at 43-46 million tonnes.

The Dalian Commodity Exchange’s most-traded May coking coal futures contract closed at 1,215.50 yuan ($178.85) per tonne on Tuesday, up 1.50 yuan per tonne from a day earlier.

The most-traded May coke contract closed at 2,019 yuan per tonne, down 11 yuan per tonne for the day. 

Fastmarkets’ MB cfr China Premium Hard Coking Coal Index rose $2.69 per tonne to $196.12 per tonne while its hard coking coal index is up $1.09 per tonne, at $182.39 per tonne.

The fob Australian indices were unchanged, at $194.11 per tonne for premium hard coking coal and $172.15 per tonne for hard coking coal.

The low-vol pulverized coal injection indices were also flat, at $137.44 per tonne cfr China and $125.13 per tonne fob Australia.

Monday, January 21, 2019

Thin trading keeps seaborne market largely stable

The seaborne coking coal market had a quiet start to the week, with many participants holding out for more transactions to emerge to set the tone for prices.

Some 25,000 tonnes of a premium mid-vol product were traded at $193 per tonne fob Australia, market sources told Fastmarkets on Monday January 21. 

Chinese market participants are taking a break from procuring seaborne materials because “we are waiting for more transactions this week for a clearer market direction”, a trader in China said.

A southern Chinese mill source said buyers were taking their time with purchases because there were plenty of January and February cargoes.

“It’s a backlog of cargoes since China did not buy in the last two months [of 2018] due to Chinese port restrictions,” he added.

At the Tangshan Port of Jingtang in Hebei province, premium hard coking coal was offered around 1,580-1,650 yuan per tonne - equivalent to about $196-205 yuan per tonne cfr China in the seaborne market - according to various sources in the city.

“Coke plants proposed an increase of 50 yuan ($7.40) per tonne last week but this was rejected by mills in the end. We are not planning to buy anything until after the Chinese New Year [on February 5],” a coke plant source in Tangshan said.

Amid concerns that emerged last Friday over the closure of berths at the Abbot Point Coal Terminal in Queensland, Australia due to incidents relating to safety, a spokeswoman for the port operator has confirmed that Berth 2 is indeed closed for Ship Loader 2 to undergo unscheduled maintenance. 

The port operator expects this to be completed in the middle of this week.

“There is no impact to trade with Berth 1 remaining operational as normal,” she said.

The Dalian Commodity Exchange’s most-traded May coking coal futures contract closed at 1,214 yuan per tonne on Monday, down 24 yuan per tonne from last Friday.

The most-traded May coke contract closed at 2,030 yuan per tonne, down 35.50 yuan per tonne for the day.

Fastmarkets’ MB cfr China Premium Hard Coking Coal Index fell $0.37 per tonne to $193.43 per tonne during the day while its fob Australia equivalent rose $1.71 per tonne to $194.11 per tonne.

The hard coking coal indices were unchanged, at $181.30 per tonne cfr China and $172.15 per tonne fob Australia.

The low-vol pulverized coal injection indices were also flat, at $137.44 per tonne cfr China and $125.13 per tonne fob Australia.

Wednesday, January 16, 2019

China AM: Steel futures maintain strength, raw materials pick up

China’s ferrous futures experienced a slight uptick on Thursday January 17 across the board, with steel contracts maintaining their strength from a day earlier.

Futures closing prices – morning session 
Shanghai Futures Exchange 
May rebar: 3,557 yuan ($526) per tonne, up 5 yuan per tonne
May hot rolled coil: 3,464 yuan per tonne, up 16 yuan per tonne 

Dalian Commodity Exchange 
May iron ore: 513 yuan per tonne, up 1 yuan per tonne 
May coking coal: 1,232 yuan per tonne, up 7.50 yuan per tonne
May coke: 2,036 yuan per tonne, up 4.50 yuan per tonne 

Raw materials 
The following were obtained from market sources:

Global Ore, 170,000 tonnes of 62% Fe Pilbara Blend fines, offered at the March average of a 62% Fe index at a premium of $2 per tonne, laycan March 1-20.

Global Ore, 170,000 tonnes of 62% Fe Pilbara Blend fines, offered at the March average of a 62% Fe index at a premium of $2.30 per tonne, March arrival.

The Fastmarkets MB 62% Fe Iron Ore Index was at $74.31 per tonne cfr China on Wednesday, up $0.53 per tonne from Tuesday.

The MB fob Australia Premium Hard Coking Coal Index fell $0.87 per tonne on the same day to $190.27 per tonne.

Key market news 
China’s auto sales fell last year for the first time since the 1990s, dampening expectations for steel demand in 2019 although some in the market think that there are still opportunities for steelmakers to remain profitable. Sales totaled 28.1 million units last year, down 2.8% from those sold in 2017, according to statistics from the China Association of Automobile Manufacturers (CAAM).

China’s domestic stainless steel prices remained unchanged for a third week amid soft demand and low supply ahead of the Chinese New Year. Fastmarkets MB’s price assessment for benchmark 304 stainless cold-rolled coil in the major market of Wuxi was 14,200-14,800 yuan per tonne including value-added tax for the week ended Wednesday, unchanged from a week earlier.

Import prices for stainless steel in East Asia moved up over the past week amid improved demand and costlier nickel, while talk also emerged in the market about a major Indonesian mill’s plans to reduce its stainless steel supply to Taiwan. 

Fastmarkets MB's import price assessment for 304 stainless 2mm trimmed cold-rolled coil in East Asia was $1,880-1,970 per tonne cif for the week ended Wednesday, widening upward by $10 per tonne from a week earlier. The import price assessment for 304 stainless trimmed hot-rolled coil in the same region was $1,760-1,830 per tonne cif for the same period, narrowing upward by $10 per tonne week on week.

The MB fob China Rebar Index was at $487.50 per tonne on Wednesday, down $0.50 per tonne from Tuesday.

The MB fob China HRC Index fell $0.21 per tonne on the same day to $480.42 per tonne.

Tuesday, December 4, 2018

Vale keeps 400mln tpy iron ore output guidance, expects prices in $60-80/t range

Brazilian miner Vale is committed to maintaining iron ore production at 400 million tonnes per year until 2023 from its estimated capacity of 450 million tpy, the company said on Tuesday December 4 during an investor presentation at the New York Stock Exchange.

The miner, the world’s largest iron ore producer and one of the most efficient ones, is not alarmed by recent price weakness, chief executive officer Fabio Schvartsman said. He maintained estimates of $60-80 per tonne for 62% Fe prices in the next year, stating “it is a comfortable band” for the company. “We were already expecting prices to soften during winter in China and planning to hold a little bit in inventories in order to take advantage during the start of next year,” the CEO said.

Friday, October 26, 2018

Usiminas focuses on domestic market in Q3; sales volumes, prices up

Usiminas, Brazil’s largest flat steel producer, focused on the domestic market during the third quarter and achieved its highest steel sales volume since the fourth quarter of 2015, its earnings report shows.

Steel shipments rose by 8.96% to 1.11 million tonnes from 1.02 million tonnes a year before, the company reported on Friday October 26. The steelmaker sold 992,000 tonnes to Brazilian customers, up by 12.47% on the same comparison, and exported 115,000 tonnes, a 14.18% decrease year on year. Hot-rolled coil (HRC) sales climbed by 7.02% from a year earlier to 320,000 tonnes in July-September. Meanwhile, cold-rolled coil (CRC) shipments reached 329,000 tonnes, up by 5.79% year on year.

Monday, July 30, 2018

Prices of COKE expected to weaken further


China’s domestic coking coal market weakened in July amid production restrictions in the country’s steelmaking hub of Tangshan and four rounds of coke price cuts by a major mill.
Metal Bulletin’s weekly assessment of prices for domestic hard coking coal in Shanxi delivered to Tangshan stood at 1,360-1,700 yuan ($200-250) per tonne on Friday July 27, compared with 1,390-1,750 yuan per tonne on June 29.

The assessment is down 30-50 yuan per tonne due to lower coke prices and weaker demand following restrictions imposed by local authorities in Tangshan from July 10 until August 31 to cut emissions, market sources said.

Cheaper coke
“Coke prices have been falling since the first working day of July and the downward momentum rubbed off on coking coal prices,” a Tangshan-based coke plant source said.

East China’s Rizhao Iron & Steel, a major coke buyer, lowered its purchase price for the steelmaking raw material four times in July. Following the reductions totaling 350 yuan per tonne, the mill is now paying 2,000 yuan per tonne for materials with 57% coke strength after reaction delivered to its facility.

Coke prices have stabilized since Rizhao Steel’s last reduction on July 19, and a segment of the market even expects them to rebound, but the bullish sentiment does not appear to be offering any support to the coking coal market.

“Though coke prices have stopped falling, the large amounts of coking coal stockpiled at various mines in Shanxi are forcing miners to slash prices for quicker sales,” a domestic trader based in Beijing said.

High inventories
Coke output remains limited in China, partially due to low profit margins forcing producers to lower their coking activity on their own accord. But the main factor limiting coke production in the country is the government’s continual efforts to reduce pollution.

A Tangshan coke producer is putting priority on drawing down its coking coal inventories instead of procuring more raw materials due to limited space in its stockyard, a source said. This is the case for other coke producers in the region as well, he said.

Subdued demand
Despite a recovery in domestic steel prices, market participants are still not seeing any support for the coking coal market.

“It is not just about high steel margins. Market fundamentals determine that if [the] supply [of coking coal] were to exceed demand, then prices come under pressure,” the Beijing-based trader said.

A mill source in Hebei province concurred. The mill’s coking rate has been cut to 2.5 million tonnes per year from 5 million tpy, he pointed out, and as a result, it has stopped procuring coking coal in the spot market.

“Our new project that was slated to begin operations in August has also been postponed indefinitely because of the Tangshan production cuts,” he added.

As such, sentiment in the domestic coking coal market remains bearish, and market participants are expecting prices for the steelmaking raw material to weaken further.

Tuesday, July 17, 2018

Trading picks up in second-tier market

The second-tier segment in the seaborne coking coal spot market saw a flurry of trades involving its top brand after more than two months of inactivity.

“[Lower rail capacity] is still a rough situation. [Rail services are] still performing below contractual performance. [Rail freight operator] Aurizon will be shifting its maintenance back to the Blackwater line [from the Goonyella line currently] after mid-September,” a seller source in Australia said.

Mining major Anglo-American’s underlying earnings before interest, taxes, depreciation and amortization (Ebitda) for its metallurgical coal division in the six months to June 30 totaled 1.16 billion, up 23% from a year earlier.


Canadian miner Teck Resources said it sold 6.6 million tonnes of steelmaking coal in the April-June quarter, down 7% on the year. The miner said in its latest quarterly report that the lower sales volume was a result of low port inventories and reduced rail capacity due to “strike preparation at [Canadian Pacific Railway’s] operations.”


It reported an average realized price of $183 per tonne for its coal, which compares with $167 per tonne in the same period of last year.


The benchmark September coke contract closed at 2,136.50 yuan per tonne, down 5 yuan per tonne for the day.


The cfr China hard coking coal index shed $4.99 per tonne to $165.02 per tonne while the fob Australia index lost $6.44 per tonne to $155 per tonne.


Four cargoes of the same brand with a laycan stretching from August 15 to September 10 have changed hands. Three of these were sold at $165 per tonne cfr China while one was traded at $155 per tonne fob Australia, various sources told Metal Bulletin on Thursday July 26.

Due to rail capacity issues on the Blackwater line in Australia’s coal production hub of Queensland, this brand had not been traded in the spot market since the end of May. The last price it fetched was $183.50 per tonne cfr China, according to Metal Bulletin’s records.

Outside of China, a September-laycan cargo of premium mid-vol hard coking coal was offered at $176 per tonne fob Australia. But the offer failed to generate any interest, an Indian mill source said.

Metal Bulletin also received reports of a cargo of premium mid-vol materials changing hands at $171 per tonne fob Australia during the day.

The miner attributed the gains to increased met coal production and a higher average realized price, according to its latest half-year report released on Thursday.

The Dalian Commodity Exchange’s most-traded September coking coal contract closed at 1,196 yuan ($176.50) per tonne on Thursday, down 1 yuan per tonne from a day earlier.
Metal Bulletin’s cfr China Premium Hard Coking Coal Index fell $1.44 per tonne to $179.89 per tonne while its fob Australia equivalent is down $0.46 per tonne, at $172.53 per tonne.