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WEEKLY MET COAL WRAP: China, ex-China prices diverge

Friday, 01 October 2021

Asia met coal prices started to see an opposing direction with the CFR China market continuing to rally amid tight supply and robust demand, and the FOB Australia market dropping on lower observed price points Oct. 1.

S&P Global Platts assessed the Premium Low-Vol HCC down $12/mt on week to $390/mt FOB Australia Oct. 1, while delivered prices to China were up $17.75/mt at $603.75/mt CFR China.

In the CFR China market, persisting supply tightness of coking coals both domestically and internationally, and high Chinese steel prices continued to provide support to rising CFR China prices.

A record-breaking trade was done Sept. 29 at $601.77/mt CFR China for 70,000 mt of Oak Grove, with a November laycan. This allowed PLV CFR China to break through the $600/mt mark, alongside higher observed price points.

However, thin trading activity is expected until the Golden Week holiday Oct.1-7 is over, industry sources said.

In the FOB Australia market, lack of buying interest was observed despite an incrementally lower offer earlier in the same week. Two trades were done Oct. 1 at around $390/mt FOB Australia for Australian low-vol Peak Downs later in the same week.

Market participants expressed mixed views toward the current FOB Australia market.

“Looking at the way prices have moved up in the past month, a downward correction cannot be ruled out,” an Indian trader said.

On the other hand, an international trader argued that “with the global energy crisis pushing the outside markets like Oil, LNG and coals sharply higher, it could lead to a supported met coal price for the near term.”

In China’s domestic coke market, the impasse between steel mills and coking plants in Shanxi has persisted with likely no results until the Golden Week holiday is over, industry sources said.

“There are no reasons for the coke prices to drop now as the domestic coking coal prices have not dropped and there is also a shortage of coke supply,” a Chinese coke trader said.

-- Staff

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