Argus fob Hampton Roads’ assessment of low-volatile and high-volatile coking coal today dropped by $1.50 / t to $107.50 / t and $106.50 / t, respectively, after dropping $10 / t earlier in the week. The high-volatile B valuation stayed unchanged at $99 / t for Hampton Roads today but lost $11 / t over the week, powered by competitive business offers.
The sharp downward shift in HVB prices was driven by high inventories at some US mines and the willingness of these suppliers to cut prices in order to secure trade in Europe. The delivery of HVB freight to Italy for a European mill in June was concluded at a price well below $100 / t for Hampton Roads, giving priority to other similarly competitive offers.
Suppliers with available LV and HVA cargoes were also encouraged to offer discounts on index-level prices. “I would say anyone buying would be looking for a discount to index prices, except for maybe high-vol B coals,” one mining company said.
The selling this week of the Peak Downs North Indian mill to a Chinese trading firm at $99 / t fob also points to the continuing lack of demand in South Asia. Market participants expect Indian mills to see more such diversions before their steel production capacity returns to normal. This adds to the downward pressure on US coal, with demand largely reduced to China. The start of Labor Day holidays in China today also indicated that Chinese buyers’ offers slowly declined over the course of this week.
There have been more spot opportunities for high-volume B than higher grades in recent weeks, with mills trying to slow down coke demand. But the northwestern European mill also said that it would not require any high-volume B coal until July, while the US high-volume B producer said that it would not offer any coal until July.
Most European steel mills are making efforts to delay and not buy cargo. “People are trying to survive by not buying too much,” said one mill. While mills face rising coke inventories as they keep their coke ovens running, another mill said that steel producers are still trying to minimize the use of coke in production and maximize the use of PCI, which is cheaper and more difficult to store.
US mining companies are hoping that production cuts in Australia will provide price support. “This would go a long way towards establishing a floor and providing support, “said one U.S. mining company.
Blackhawk, a U.S. mining firm, resumed operations last month after a temporary halt on 23 March aimed at limiting the spread of Covid-19.
