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.