Activity in met coal market
halts on cyclone
Singapore—The Asia Pacific metallurgical coal market was mostly
steady Tuesday as participants monitored the progress of Cyclone
Debbie as it made landfall in northern Queensland.
Most participants appeared to hold back bid or offer indications
until they could properly assess the impact of the cyclone.
Force majeure was declared by at least one Australian producer,
Yancoal, and a port, while four other miners were widely reported to
have indicated there was a high possibility of declaring force majeure,
sources said.
Three of the four operate premium metallurgical coal assets.
One has “verbally indicated that they are preparing to declare
force majeure,” a customer said, who had yet to receive firm
documentation at time of reporting. Another premium coal producer
indicated it was currently in the process of potentially declaring
force majeure.
The world’s largest seaborne producer and exporter of
metallurgical coal, BHP Billiton, has confirmed the temporary
suspension of mine production at Goonyella Riverside, Peak Downs,
Daunia and South Walker Creek and Poitrel, a company official said in
an email response to Platts.
At least three sources said a port had also declared force majeure
for several cargoes, but this could not be immediately confirmed.
Platts assessed Premium Low Vol FOB Australia flat day on day at
$152.25/mt FOB Australia Tuesday, while second tier coals edged up
$1/mt to $161/mt CFR China.
Most market participants said it was still too early to evaluate the
impact of the cyclone on production and in turn prices as port, rail
logistics and mine damage was still being assessed.
Sellers of non-Australian coals said there was no surge in inquiries
for their supplies as a result of the cyclone.
There was some concern about second-tier coal supply after news
of Yancoal’s Middlemount mine force majeure broke.
“We’re quite worried. I think the price will definitely go up now.
Middlemount is quite important for the second tier,” said one
Chinese trader.
However, another source offering a second tier coal said the force
majeure would have limited impact, and the closure of another major
second tier mine would have a greater effect.
Still, while he said he would now offer at a slightly higher price,
but did not plan to go above a $1-$2/mt increase. “If you raise the
prices so high now, who will buy it? We can’t promise a delivery
now,” he said.
Another miner source said Middlemount’s quick force majeure
declaration could mean the situation was severe. “As a miner you
usually have 24-48 hours to decide after an event hits. If they decided
so quickly, it must mean the situation is severe,” he said.
Chinese domestic met coke prices up
Chinese domestic met coke prices in Tangshan and Hebei rose for
the third straight trading day Tuesday, by Yuan 50/mt, amid a shortterm
supply-demand imbalance, a coke supplier said.
A steelmaker said end-users would likely accept the third price
hike, but it would be difficult for producers to push for a fourth as steel
prices in northern China have fallen in the last few days.
In the Chinese domestic metallurgical coal market, there was
widespread talk of a price hike for some categories of coking coal of
Yuan 20-30/mt from private and possibly state-owned mining
corporations, sources said.
This is because of strong coke price performance and continuing
positive margins for steelmakers, sources said. It is uncertain if
weather conditions in Australia played any part.
— Edwin Yeo, Elizabeth Low