September 19, 2020 - After surging over the past fortnight on the back of tightening stocks and growing optimism among miners anxious to emerge from a market trough, US coking prices were stable today. The lacklustre pace of spot transactions in Europe and the pressure of high iron ore prices on steel production margins have meant that most mills are still reluctant to pay much above the offers they received for third-quarter deliveries.

The Argus daily fob Hampton Roads assessment for low-volatile coking coal stands at $112/t today, supported by strength in the Australian premium low-vol segment. The high-volatile A price is unchanged at $116/t today, after rising $5.50/t this week, while the high-volatile B price is at $103/t, up by $4/t over the same period.

Despite the caution among some mills, there is acknowledgement that spot demand could increase in the fourth quarter. Domestic price negotiations in the US have also kept US miners occupied. "US producers are holding back cargoes during their domestic negotiations," one European mill said. "Once these negotiations finish you will find fourth-quarter cargoes being offered again."

Few spot trades bound for Europe have been concluded since offers started rising. But one miner is confident that it is only a matter of time before trades are closed. "There is a lot of activity for the fourth quarter and 2021, so it's a work in progress for the time being." The results of recent tenders issued by Brazilian mills seeking volumes for December and next year are still pending.

Two recent tenders from Turkish mills, one of which closes today, have resulted in no purchases from the US, miners say. "The tone was that they didn't see the prices they wanted or certainly as low as they wanted," a miner said.

Interest in met coke remains healthy, with one Europe-based trader saying he has been approached by some mills for nut coke and met coke in the past few days. But the trader was sceptical about whether this demand will translate to a significant spike in prices. "I don't see a big difference between the third quarter and fourth-quarter buying yet. Polish coke offers are still available at €180/t ex-works with discounts of €10-15/t possible. But some Polish and Czech producers are trying to increase prices."

Offers from Colombia have also risen, buoyed by limited inventories following Covid-19 production disruptions and the diversion of volumes to China in previous months. Firm offers at the end of August were around $215/t fob Colombia, but some offers have risen to $240-245/t fob Colombia this week.