November 21, 2020 - Seaborne premium hard coking coal prices in both fob DBCT and cfr Jingtang markets edged up on a daily basis on Friday November 20, although the ongoing import restriction from China on Australian coal has caused a widening differential between the prices since late October.

Fastmarkets Indices

Premium hard coking coal, fob DBCT: $98.40 per tonne, up $0.82 per tonne
Premium hard coking coal, cfr Jingtang: $160.27 per tonne, up $0.49 per tonne
Hard coking coal, fob DBCT: $92.78 per tonne, unchanged
Hard coking coal, cfr Jingtang: $144 per tonne, up $2.32 per tonne

An 80,000-tonne cargo of premium low-volatility hard coking coal, with December 10-20 laycan, was traded at $99 per tonne fob Australia on Friday.

“The premium low-vol hard coking coal price in the fob market is at a relatively low level, largely because Chinese steel mills can’t import Australian coking coal. But I don’t think premium hard coking coal fob prices will drop further. Half of miners in Australia will struggle to make profits if that happens,” a steel mill source from East Asia said.

Chinese steel mills prefer premium low-vol hard coking coal from Australia but the restriction on Australian coal since the beginning of October has deterred them from acquiring this material. The result is a decline in premium hard coking coal fob prices, especially for premium low-vol hard coking coal material. At the same time, Chinese buyers are turning to US- and Canada-origin premium hard coking coal, which has a higher freight cost than for Australia-origin material and is being sold for higher prices due to tight availability.

Both fob DBCT and cfr Jingtang prices had fallen in tandem until late October, but while the fob price has continued to fall, the cfr price has rebounded to an eight-month high. The price differential between the two markets is now $61.87 per tonne, compared with $9.98 per tonne on October 8, the first trading day after the Golden Week holiday in China.

“This week a December-laycan Panamax vessel of Blue Creek 7 was traded at $160 per tonne cfr China and a late November-laycan Panamax vessel of Raven was traded at around $162.50 per tonne cfr China,” sources heard.

“Now that China is not buying coking coal from Australia, steel mills in countries such as India have more bargaining power when buying spot cargoes. Now they can get premium hard coking coal at around $99 per tonne fob Australia,” a trader source said.

Dalian Commodity Exchange

The most-traded January coking coal futures contract closed at 1,321.50 yuan ($200.83) per tonne on Friday, up by 9.50 yuan per tonne.

The most-traded January coke contract closed at 2,480.50 yuan per tonne, up by 63 yuan per tonne.