Coal news and updates

ASIA MET COAL: Market stable, with sentiment still weak

The Asia-Pacific metallurgical coal market was mostly steady Monday, with China, the most active spot buyer, returning only Tuesday.

Platts assessed premium hard coking coal and second-tier materials unchanged at $164.5/mt CFR China and $150.5/mt CFR respectively.

With regards to expectations on China's return, a Singapore trader said he expected the market to "pick up, but not immediately. There should be more buying at some point," he added. He also said no miners had approached him for spot sales in recent days.

Recent offers heard have been for November cargoes, implying that miners may have sold October cargoes early. "We were well sold before the holiday," a Singapore-based miner said.

Separately, with most spot buyers still away, many marketing managers at met coal mining companies were focusing on negotiating Q4 2013 pricing for long-term contract customers, rather than spot.

For top-tier coals, a market source said demand for prime hard materials has been hit by several weeks of weakening steel prices. End-users are shunning such expensive products and are looking to second-tier coals to lower costs, the source added. Sellers would find it difficult to find buy-side interest for top brand coking coals at $165/mt CFR China, he said.

In view of such conditions, the source said Canadian mid-vol materials were a good fit since they were cheap and good.

Meanwhile, there was talk of an indicative offer for Australian second-tier 66-68% CSR and 8 CSN at the high $150s/mt CFR China for early November laycan, either Panamax or Capesize.

On mid-vol PCI, there was talk of an end-user scouting for coals with some CSN at no more than $122/mt CFR China. Most recent offers for such material, however, were reported a notch higher, at $114-115/mt FOB Australia, which implied $130.5-131.5/mt CFR China using Panamax freight.

In Europe, a steelmaker said he did not require any spot coking coal until Q1 2014, though he would procure some spot PCI next month, most likely from Russia.

"We're seeing a small improvement in steel sales," he said, adding that although automotive-related demand was a little better it was still 5% lower than at the start of 2013.

The steelmaker said his plants were running at around 80% capacity utilization. "We're struggling, and are more or less at breakeven."

Asked about his outlook for the spot coking coal market, he said he expected the pace of Chinese demand to be lower in Q4 2013 than in Q3, citing higher stockpiles and possible declines in steel output.

Source: Platts