September 6, 2023 -  

What's happening? Coking coal prices in the seaborne markets have diverged with lower China CFR import prices as spreads widened through August. A recovery in demand in India and contract requirements elsewhere ahead of the fourth quarter limited availability from Australia and the US. Weaker Chinese import demand on stronger Mongolian availability -- and a cooling in domestic coal and metallurgical coke, steel markets -- pushed down CFR pricing for premium low-volatile coking coal.

What's next? The decline in China import prices continues to expose participants such as miners and traders to regionally differentiated markets, complicating spot trade. The spread between FOB Australia benchmark prices with equivalent prices available in China widened to $31.80/mt on Aug. 31, equivalent to 12% of the PLV FOB price. China continues to be more reliant on Mongolian and Russian coking coals, with post-COVID restrictions aiding inland transportation and production. Stronger contract sales of Australian coals into Asia and Atlantic markets limited availability for China, while sanctions on Russian coals in Europe and Japan may see price dislocations persist.