Platts-observed volumes of seaborne metallurgical coal traded on the spot market in Asia-Pacific rose 33.97% to 25.30 million mt in the first half of 2013 versus the second half of 2012, Platts data showed.
This accounts for around 28.5% of the total seaborne Asian market, estimated for H1 2013 at 88.5 million mt, a number calculated as an average of analyst reports’ import estimates for Asia, including from Deutsche Bank, Goldman Sachs, Morgan Stanley, Credit Suisse and HSBC.
Over the first half of the year, January saw the highest total volume of premium hard coking coal (PHCC), hard coking coal (HCC) and PCI coal traded at 5.30 million mt, with the lowest in March at 2.03 million mt, and giving an average monthly spot volumes seen by Platts at 3.63 million mt over H1 2013 (excluding semi-soft and semi-hard coking coal).
Spot trading volumes were impacted in February by the extended Lunar New Year celebrations in China, and in March when risk-averse buyers pulled back from the market following substantial price falls.
Australia's on-going dominance as a supplier of metallurgical coal was unchallenged over 2013 with 71.88% of Asian seaborne PHCC, HCC and PCI spot trades heard concluded over H1 2013 coming from the country. On a volume basis this was an increase of 3.91 million mt to 15.6 million mt, or 33.39% when compared to the second half of 2012, according to Platts data.
On the demand side China took 80.14% of the Asian PHCC, HCC and PCI seaborne spot cargoes reported by Platts on a volume basis, illustrating the primary trade flow in the coking coal market.
The latest import data from China's General Administration of customs showed China imported 30.737 million mt of seaborne coking coal over H1 2013, a number calculated after excluding imports from landlocked Mongolia.
Platts-observed spot transactions into China in H1 2013 amounted to 66.09% of total Chinese seaborne imports over the period.
Australia vs. Mongolia
The upwards trend in Australian export volumes, was also visible in the import data from China's General Administration of customs.
In H1 2013 38% or 13.29 million mt of total imports of coking coal into China came from Australia, up from 24%, or 6.67 million mt of total imports over H1 2012.
The latest China import data also showed a significant downwards trend in Mongolia's [overland] export volumes to China, down 44.76% in June versus May, and a fall of 72.66% or 1.83 million mt year-on-year over June.
This means that China imported only 17% of its total volume over H1 2013 from Mongolia, a significant fall from 34% in H1 2012.
The downwards trend of Mongolian exports is a reflection of the challenging price environment, with the on-going difficulty of the country’s producers to sell profitably in the recent, low-price environment, a Mongolian mining executive told Platts Tuesday.
The source added that, contrary to recent speculation of a government-enforced closure, the border crossing Tsagaan Khad remained open, and that the decline in Mongolian volumes was “mainly due to prices.”
Premium low-volatile HCC prices have seen five months of almost continuous decline, reaching $142/mt CFR China on July 12, the lowest assessed value since Platts started assessing on October 1 2010, and dropping from $187/mt CFR on February 21, Platts data showed.
Meanwhile, stronger Australian volumes into China highlights a trend of increased dependence on the country by Australian miners, many of whom have increased output in the last two years while demand from traditional customers in Japan, Korea and Europe has remained static.
Despite the increase in seaborne imports into China, good internal supply to the Chinese domestic market has kept values pressured, market sources said.
“The surge in import volumes has not been sufficient to balance the market. As the buyer of last resort for spot cargoes in an oversupplied market, China is benefiting from a weak market without providing a floor to falling prices,” Goldman Sachs said in a recent report.
Australia’s miners retain market dominance
Given the large volumes of Australian coking coal in the market makes it unsurprising that the main producers whose coals were seen trading spot are the large Australian miners.
BHP Billiton-Mitsubishi Alliance (BMA) led the charge, accounting for 31.78% of the total PHCC, HCC and PCI spot trades observed in Asia for H1 2013, calculated on a volume basis, up from 22.93% of the spot trades seen by Platts over H2 2012.
The second largest by “spot market share” was Peabody Energy, with 10.10% of the spot volume, up from 4.69% captured in H2 2012, helped by strong PCI volumes, Platts data showed.
On the trading side the top five most active trading houses in the market, in no specific order, included Winsway Coking coal Holdings Limited, CNBM Energy Co. Ltd, Noble Energy, M Resources Pty Ltd. and Pacific Minerals Ltd.
Premium HCC spot trade dominated by BMA
BMA’s leading market share was clearest in the premium HCC segment, where the company accounted for around 60% of spot trades observed, followed by Glencore Xstrata and Teck.
Spot HCC more evenly split
The second-tier hard coking coal market was much more evenly split with Australian, Indonesian, US and Canadian miners sharing the top four.
It is worth noting that a substantial part of Teck Coal’s sales to China are done through a local distributor that doesn’t compete for the producer’s coal on the open market.
The coal is then sold in smaller volumes domestically. As such, this volume was not captured in Platts’ assessment process, and does not figure in this data.
Russian PCI volumes pulverized by Australia
In the Asian PCI spot market BMA’s coals were most prevalent, with a 24.45% share over H1 2013, followed by Peabody with 20.52%.
The Russian producers saw high number of trades, however due to the smaller size of the parcels on a volume basis, they could not compare to the larger cargo volumes shipped by Australian producers.