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.