Tuesday, October 20, 2015

PCI coal trading activity picks up on seaborne market

A couple of transactions involving pulverised coal injection (PCI) coal were reported on the metallurgical coal market on Monday October 19.

A few cargoes of November-laycan mid-vol PCI materials were heard sold to China at $70-71 per tonne cfr, sources said.

However, market participants warned that a potential supply increase in the fourth quarter could weigh on the spot market, in the face of sluggish demand in the winter season and competitive domestic materials.


"Unless there are adverse weather conditions in northern China during winter [which would affect domestic coal production], the demand for imported coking coal will remain sluggish," a trading source told Steel First.


Trading activity outside China was limited. Enquiries were heard from India and Europe, but buying interest remains thin, sources added.


On Global Coal, a 75,000-tonne cargo of premium hard coking coal under the branded bracket was traded at $77.75 per tonne fob Australia. It is not known at the time of writing which of the five brands – Goonyella, Oaky Creek, Moranbah North, North Goonyella and Illawarra – was involved in the transaction.


The cargo's laycan is in December, according to a source with knowledge of the transaction.


Steel First’s cfr Jingtang premium hard coking coal index rose $0.55 per tonne to $86.28 per tonne on Monday, while the fob Australia premium hard coking coal index rose $0.29 per tonne to $80.68 per tonne. 


Both the hard coking coal indices were flat, at $81.71 per tonne cfr and $74.84 per tonne fob. 


On the Dalian Commodity Exchange, the most-traded January coking coal futures contract closed 0.50 yuan ($0.10) per tonne higher for the day, at 565.50 yuan ($89) per tonne. The most-liquid January coke contract closed 4 yuan ($1) lower, at 735 yuan ($116) per tonne.

Buying momentum builds up on seaborne met coal market

Trading momentum appears to be picking up on the seaborne metallurgical coal market, though the tonnages involved are becoming smaller and smaller.

There were at least nine deals reported over the past two days, compared with ten for the whole of last week, according to Steel First’s records.


Transactions concluded this week all involve smaller tonnages compared with last week’s full Panamax or Capesize shipments.


Of these latest nine deals, as least five cargoes are bound for China. 


Most Chinese mills are keeping a very close eye on their cost as well as raw materials inventory levels, source told Steel First on Tuesday October 20. 


"We don’t have any immediate plans to buy imported materials. Even if we want to buy, it will be in small quantities," a mill source told Steel First. 


The mill’s immediate priority is to control its production costs in the face of a depressed steel market, a predicament faced by most other steelmakers in the country, the source said. As such, the more competitively priced domestic coal as well as port materials are a more attractive option for them, though they are not completely taking their eyes off the seaborne market, he added.


A second Chinese mill source expects the steel market to only recover in spring, as "the long winter has just started". 


Some other Chinese mill sources told Steel First that they were still looking for cargoes, though they are more the exception than the rule.


On Global Coal, a number of offers under the branded bracket were reported at $78-78.50 per tonne fob Australia, according to sources. These are cargoes of one of the following products: Goonyella, Moranbah North, North Goonyella, Illawarra and Oaky Creek. 


Steel First’s cfr China premium hard coking coal index inched up by $0.32 per tonne on Tuesday to $86.60 per tonne while the fob Australia premium hard coking coal index fell $0.18 per tonne to $80.50 per tonne.
The hard coking coal indices were both unchanged, at $81.71 per tonne cfr China and $74.84 per tonne fob Australia.


On the Dalian Commodity Exchange, the most-traded January coking coal futures contract closed 4 yuan ($0.60) higher on Tuesday, at 569.50 yuan ($90) per tonne. The most-liquid January coke contract closed 3 yuan ($0.50) higher, at 738 yuan ($116) per tonne.