July 17, 2019 - EU imports of coking coal slumped in May, as regional steel production cuts and a sluggish outlook caused mills to cut back on volumes from all origins.

In all, the EU imported 2.74mn t of coking coal in May, down by 35pc from 4.25mn t in April and also down from 3.89mn t in May 2018, according to the latest data from Eurostat.

Imports from Australia slipped to 1mn t in May from 1.1mn t in April — a more gradual rate of decline than was registered for other origins, possibly because of the role played by some key Australian brands in European blends. Imports from the US fell to 509,402t in May from 957,439t in April. Imports from Russia fell to 366,901t from 507,800t over the same period, while volumes from Mozambique edged down to 103,536t from 118,261t.

On the buy side, UK imports fell to 75,998t in May as British Steel went into administration, down from 311,111t in April. Poland's intake was little changed month on month at 244,447t, with ArcelorMittal's early-May announcement of a temporary production halt at its Krakow mill yet to show an impact on central European imports.

The data will come as no surprise to the market. Participants have for several months noted a slowdown in European spot bookings, and at present a build-up of coking coal stocks at Polish ports. US coking coal producers have been receiving requests from European mills for delays to laycans on contracted tonnes, with buyers keen to pace arrivals in the face of reduced consumption rates.

Robust prices are also doing little to entice additional spot bookings. Hard coking coal prices have dropped steadily in recent weeks, but fob Australia prices for premium hard low-volatile material were still holding above $200/t prior to May. The Argus daily fob Australia index for premium hard low-vol is now at $181.45/t, while the fob Hampton Roads low-vol index is at $167/t. Argus today assessed high-volatile type A (HVA) at $180.50/t fob Hampton Roads and high-volatile type B (HVB) at $147/t fob Hampton Roads.

Coking coal prices are viewed as fairly strong by European mills feeling the pressure from sluggish finished steel prices and iron ore prices at multi-year highs. The Argus ICX index for 62pc Fe fines is at $122.25/dmt cfr Qingdao, up from $72.40/dmt at the start of 2019.

Market participants this week told Argus that some European mills are looking at further ways to reduce blast furnace-based steel production, but are treading carefully to avoid having to take any coke ovens off line.

Spot buying interest has remained extremely muted, particularly into the summer holiday season and associated maintenance periods, suggesting that the next sets of import data are unlikely to show much uplift in EU imports.