Coal news and updates

Coal Prices: Coking Coal Trading Around One-Year Low

Coking coal prices are hovering around a year low, with the commodity erasing the gains that it experienced this year amid a major supply disruption.

Coking coal prices surged in April, reacting to a supply pinch after a cyclone in Australia impacted the transport of coking coal. The supply disruption pushed free-on-board premium hard coking coal to its highest price since the second quarter of 2011. The same supply disruption also saw quarterly contract prices negotiated at an all-time high of $330.

While prices are slumping, Chinese buyers are becoming more interested in purchases and that could signal that the market has bottomed. On Monday, according to Metal Bulletin, China purchased coking coal for as low as $139 per ton, with traders commenting that interest increased as prices fell.

While coking coal prices have been correcting since their peak, demand from China is increasing. Preliminary Chinese customs data showed the country imported 22.2 million tons of coal (both thermal and met coal) in May. Volumes were down 10.5% from April but climbed 16.6% year on year. Total imports for the first five months of 2017 jumped 30% year-over-year to 111.7 million tons. The increase in demand while prices corrected supports that the slump is due to the supply chain getting back to normal.

Last week, Teck Resources said that it expects a drop in its average realized price for the sale of coking coal for the second quarter. The miner now expects an average realized price of between $160 and $165 per ton, well below the second-quarter $190 benchmark price set by the company. In the first-quarter, the company’s realized price was $213 per ton. Teck expects the sales volumes to be in the range of 6.8 million to 7 million tons in the second quarter compared with the previous forecast of 6.8 million tons.

Source: Economic calendar