ASIA MET COAL: Premium HCC hits lowest since October 2010

2013-05-21

Metallurgical coal prices fell Monday to a historical low on continued bearish sentiment and a lack of buying interest. Platts assessed premium low-volatile hard coking coal $1 lower at $139.50/mt FOB Australia Monday, which is the lowest since Platts launched daily assessments in October 2010.

Competitively priced Australian prime hard coals did not appear to attract enough prospective buyers as steelmakers indicated a preference for lower quality second-tier HCCs to cut raw material costs.

For example, a Chinese steel producer was offered Australian top-tier premium low-vols at $154-155/mt CFR China last week. The Capesize cargo was for an end-June laycan. But the source said a figure closer to $138/mt FOB Australia, or $146/mt CFR China assuming $8/mt for Capesize freight, would be more appropriate to their purchasing appetite.

Another manager at a different mill said: "There is still some chance of domestic coal dropping below $150/mt CFR equivalent [for premium HCC]," adding that he believed the market might not bottom out until July or August.

Meanwhile, another Australian premium low-vol but relatively high phosphorous material was heard offered last week at $150/mt CFR China by a trading source.

The picture was slightly more bullish in the second-tier market where there was some support. Standard-quality HCC was assessed unchanged at $127/mt FOB.

A Tangshan-based mill source said he was looking at some Canadian HCC 65-70% CSR, 22-24% VM, 9.5-10.5% ash, and would pay around $137-138/mt CFR for Canadian HCC.

A Shandong-based trader would also consider $140/mt CFR China for Australian second-tier HCC, 60-65% CSR, 22-24% VM and 8-8.5% ash.

Indicative offers were around $145/mt CFR for both materials, buyers reported.

A sell-side source also said the market was still bearish, saying: "It was quite difficult to find a buyer at $140/mt CFR for second-tier." However, the source added that there was not much room for prices to fall further.

"The issue is no longer how much lower the market can go but when prices might start to see an upturn." The source expected a more bullish turn within one to two weeks.

MID-VOL PCI GAINS SUPPORT

Mid-vol PCI prices gained some support on Monday, with several trading sources expressing buying interest at $118-120/mt CFR China for Australian mid-vol PCI with 16-20% VM and around 10-12% ash.

An east China buyer said he had just agreed to buy Australian 20% VM and 10% ash PCI at around $120/mt CFR China. The PCI was however a part of a combined cargo which also included Australian second-tier HCC. The price for the latter, however, is still currently being negotiated.

Several sources indicated that $120/mt CFR China was slightly higher than their expectations of $115-118/mt CFR China. However the deal appeared to be repeatable, with an indicative bid from a Beijing trader coming close at $119/mt CFR China for similar PCI coal.

This was also similar to another buy-side interest from another Shandong trader who saw $119/mt CFR China as reasonable for Australian 16-17% VM and 12% ash PCI.

For low-vol PCI, a Tangshan mill source said he would pay $120/mt CFR for Australian 13% VM and 9-9.5% ash PCI on Monday.

On semi-soft, a trader indicated that he would consider bidding for Australian material at $94-95/mt FOB. The specifications are 33-36% VM, 10% ash, 0.7-0.9% sulfur and 5 CSN. The offer price heard last week for similar product was at around $97/mt FOB Australia.

On metallurgical coke, a Russian producer is currently offering 62% CSR and 64% CSR products at $242/mt FOB east Russia and $250/mt FOB respectively.

Meanwhile, coking coal futures on the Dalian Commodity Exchange rose slightly, by Yuan 12 ($1.93), Monday for its most widely traded September contract, settling at Yuan 1,166/mt.

Source from : Platts

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