By Jun Kai Heng

November 12, 2020 - Continued oversupply pressured the Australian coking coal price amid ongoing Chinese import restrictions.

S&P Global Platts assessed the Premium Low-Vol HCC index at $104.75/mt FOB Australia Nov. 10, up 25 cents/mt on the day from a four-year low.

Sources pointed to expectations of increasing diversion of Australian coking coal sales away from China, with continued uncertainty over the lifting of import restrictions in January.

While market participants predicted that Indian end-users would benefit from the increased supply of Australian coking coal, a mismatch between cargoes on offer and specific end-user demand has led to a flattening of spreads between premium medium volatile and premium low volatile matter coal brands.

The brand relativity between Saraji and Goonyella coal was assessed at parity in the FOB Australia market, compared with a $7/mt spread in the CFR China market.

Limited spot demand from Indian end-users for premium low-vol coking coal was a major factor behind the unusual change in brand relativities, market participants said.

Indian spot demand was largely directed toward premium mid-vol coking coal brands, amid an increasing number of offers for China-bound premium low-vol coal cargoes, several traders said.

Shipment data seen by Platts showed a sharp increase in Indian imports of Australian coking coal in September at over 3.5 million mt, from 2.2 million mt in August.

Market participants indicated that this was on the back of a recovery in Indian steel production after an easing of COVID-19 lockdown measures.

With US and Canadian coals fetching even higher prices in the Chinese market, import reliance on Australian coking coal could increase, an international trader said.