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Asia: Coking coal buyers waiting for seaborne market to drop

https://www.chemnet.com   Apr 22,2011 Platts
The tradable value of seaborne hard coking coal slipped further Thursday as overall sentiment soured and buyers held back from buying in the hope of lower prices.

Premium Low Vol lost $2/mt on the day, reaching $320/mt FOB, its lowest point since February 24. HCC 64 Mid Vol also dipped by the same amount, pulling it below the $300/mt mark, at $298/mt FOB.

A gap remained between bids and offers. Australian HCC was available close to long-term contract levels of $325-330/mt FOB for May loadings, but Indian buyers were looking for sub-$300 numbers, a source said.

"If anyone comes into the market now, they will need to cut their price expectation," an Australian mining source said, after having recently tried and failed to sell a cargo into the Indian market.

As prices of flat steel products fall globally, sources felt there was a growing likelihood that mills would reduce their steel output, and reduce their uptake of contracted coking coal, which in turn could create additional spot supply.

"The market is completely dead. The whole of Asia is looking at [steel] production decreases, and nobody wants to buy [coking coal] now, even India, the biggest spot market," a Singapore trader said.

Another Singapore trader had a slightly different view.

"Indian steelmakers do want to buy, but they are in no hurry as their inventories are okay," the trader said.

Miners themselves were increasingly candid about the market direction.

"No-one expects these historically high prices to stay," a senior marketing source at an Australian mining company said. "It's just logical and shouldn't come as a surprise to anyone."

He added that some volatility could be expected going forward, as buyers would hold back up to a point, but would then probably return to the market at the same time.

Spot supply remains limited, however, and some miners kept a firmer opinion of the market.

"Our understanding of the market is that pricing remains pretty much at levels achieved for the Apr/Jun quarter," a Canadian miner said Wednesday.

A fourth miner said Thursday that he was encouraged by reports of possible interest at $330/mt CFR China by large coastal mills for premium coals such as Elkview, German Creek or Wollombi. He said he hoped this could act as floor for the market.

On the market for lower-quality coking coals, some US-origin 37-38% VM with 2% sulfur, 9% ash maximum at 30,000 maximum fluidity was being sold into China by traders at close to $180/mt CFR.

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