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WEEKLY MET COAL WRAP: Asia PLV CFR prices continue to rally

Friday, 13 August 2021

Asian metallurgical coal prices continued their upward momentum on firm demand and limited supply of cargoes in the spot market.

S&P Global Platts assessed Premium Low-Vol HCC up $2.75/mt on week to $222.25mt FOB Australia on Aug. 13, while delivered prices to China were up $18/mt to $353.50/mt CFR China.

In China’s market, firm demand for premium coals and domestic supply tightness continued to give support to the rising CFR China prices.

A trade was done for Canadian premium mid-vol Raven and premium low vol Elkview at $343/mt CFR China for 85,000 mt and September laycan.

Meanwhile, offers for US and Canadian coals are also rising in price. Despite the rising CFR China prices, an import arbitrage still exists between Chinese domestic premium coals and imported coals.

With imported materials being a cheaper option, this continued incentivizing Chinese buyers to look for imported coals.

“Some mills located near the ports also prefer imported coals to domestic coals as they save land transportation costs.” a Chinese end user said.

In China’s domestic coke market, the third round of price increases, by Yuan 120/mt, was accepted by a major steel mill in Hebei.

“Steel mills in Hebei have very low coke stocks and they need to restock,” a Chinese coke trader said. “They had no choice but to accept the uptick.”

However, he added that he is “confused by the high demand for raw materials and steel production curbs at the same time but the downward pressure would definitely be present in the coming months due to the increase in supply.”

In the international market, supply tightness and firm buying interest continued to give strength to FOB Australia prices. Active trading was also seen later in the week.

Some said rising CFR China prices also gave support to the FOB Australian prices. “China is buying more US and Canadian coals at a higher price. But the usual US and Canadian coal buyers are not willing to pay for such a high price,” a Northeast Asian steelmaker said. “So, they buy Australian coals instead. Hence, the demand for Australian coals go up and FOB Australia prices follow."

-- Staff

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