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Asia metallurgical coal: Market calm with China buyers refraining

Asia metallurgical coal: Market calm with China buyers refraining

The Asia-Pacific seaborne market was mostly calm Tuesday with limited buying appetite from China, the largest spot buyer in the region. Platts assessed Premium Low Vol material steady at $122.75/mt CFR China Tuesday. This equates to $109/mt FOB Australia after deducting $13.75/mt for Panamax freight. In the top-tier segment, an offer was made by a northern Chinese trader for Australian material with around 70% CSR and below 20% VM at $125/mt CFR China. This was for an October early to mid laycan cargo. Bid price indications for such material was at $120-121/mt CFR levels. Sources indicated that the premium segment was still a tough sell to end-users in China since most steel plants have already procured previously. What could happen next could be some opportunistic selling from traders to traders, one market source said. Outside China, a spot deal was reported Tuesday for Australian 69-70% CSR and 9.5-10% ash premium mid-vol at $109/mt FOB Australia for an October laycan 60,000 mt shipment. While its destination wasn't disclosed, two end-users in India, the second largest importer in Asia, expressed willingness to bid no higher than $106/mt FOB Australia for such a cargo. In the second-tier market segment, there was an indicative offer for Australian 55-58% CSR HCC for October laycan at $94/mt FOB Australia. Price indications hovered at around $90-92/mt FOB levels. A mining executive said that while he saw a lot of enquiries for tier-2 HCC, customers were mostly hesitant, and reluctant to make any quick decisions. A Chinese end-user confirmed he was in no rush, explaining that domestic supply was comfortable. Sources were also rather uncertain about the recent price volatility for downstream steel prices and its impact on raw materials. Several sources felt that the sharp uptick in billet prices over the weekend was more due to opportunistic buying than a major change in demand-supply dynamics and hence were not very confident about its sustainability. One Chinese trader said domestic coke could still withstand the bearishness evident in steel prices due to low coke inventories and hence the adverse impact on met coal would be minimal. "If coke can't drop, coking coal can't drop." In the PCI segment, a spot transaction was reported done at $93-94/mt CFR south China for a prompt-loading half-Capesize cargo. The deal was however not considered for assessment purposes since it falls outside Platts' 7-45 day window. Meanwhile, in the domestic market, China's largest met coal producer -- Shanxi Coking Coal Group Co. -- Ltd announced on its company website that it had issued a notice to strengthen measures against safety hazards which would require comprehensive checks and identifying management loopholes. One analyst said that theoretically such measures would adversely affect production of the mines, although it would be "hard to quantify" exactly how much the impact would be. Elsewhere, the Indian steel industry was said to be coming under heavy pressure from the recent influx of competitively-priced Chinese steel imports, according to sources in India. The resultant fall in domestic steel prices could put a squeeze on raw material budgets. "Most mills in India are suffering from liquidity issues", according to a steelmaker in East India. "If there is going to a rise in iron ore and steel [prices], then we will have to pay the increment out of our own pocket." This had an apparent impact on the coke market with an international trader saying that stronger Chinese steel exports to India were limiting their appetite for seaborne coke as well. On the paper market, the most widely-traded January 2015 coking coal contract on the Dalian Commodity Exchange lost Yuan 6/mt ($0.98/mt) to Yuan 788/mt. Meanwhile, the coke contract dropped Yuan 9/mt to the last-traded price of Yuan 1,082/mt. >>

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