By Mariaan Webb

November 23, 2020 - Coking coal major Teck Resources has announced that it is restructuring its sales book for next year to target higher sales to China, where prices have increased on the back of rising demand.

The Canadian major is targeting Chinese sales of 7.5 million tonnes in 2021, which it aims to sell at CFR China pricing, which is currently at a premium of about $50/t to Australian FOB spot pricing.

Teck explained on Monday that pricing in China for its steelmaking coal had started to increase in the middle of the current quarter, when a large portion of its overall sales were already concluded. However, additional spot sales to China were concluded gradually and the miner had achieved an average premium of more than $35/t above Australian FOB spot pricing at the time each sale was concluded.

The most recent three cargos were sold at prices between $160/t and $165/t CFR China, it said in a statement.

While estimated fourth quarter sales remained within Teck’s existing guidance of 5.8 million to 6.2 million tonnes, the company said 20% of these sales were now to Chinese customers.

“In a declining coal price environment, our realised coal price relative to benchmark would normally be lower than the long-term average of 92%. As a result of these recent sales at premium prices, however, we are estimating that our fourth quarter realised price will reflect that long term average of approximately 92% despite the price drop for markets outside China where the majority of Teck’s steelmaking coal is sold,” it said in a statement.