US Coking Coal Prices Soften on Weak Steel Prices in Europe

The United States’ metallurgical coal export prices have been losing strength since last week, as lower steel rates weakened regional spot demand for raw materials from major producers in Europe.

Moreover, prolonged US-China trade tensions have dampened buying sentiment among China-based end-users.

Furthermore, China’s appetite for US met coal has been precariously imperiled by ample availability of alternative supplies from Mongolia, Australia, and Russia as well as domestically produced coals in China.

China to provide tariff exemptions on US coking coal imports

Amidst a yearlong trade dispute between the world’s two largest economies �" the Chinese Ministry of Finance has permitted the country’s users to apply for tariff exemptions on coking coal imports from the United States.

Notably, the Chinese government had imposed a retaliatory 25% tariff on $16 billion worth of US products effective August 23, 2018, shortly after which the US imposed a 25% import tax on Chinese products.

The tariff exclusion on US coals will enable US low-vol HCC to be sold at potentially better realized net prices than under China’s current additional 25% import tariffs.

Nevertheless, US coking coal comprises only a small proportion of China’s overall coking coal imports, with Australia and Mongolia being China’s biggest coking coal suppliers.

PRICE ASSESSMENTS

The latest FOB US East Coast price of low-vol hard coking coal is assessed at USD 182.00/MT, based on 58% coke strength after reaction (CSR), 8% ash, 0.8% sulfur and 19% volatile matter material.

For Indian buyers, the above price amounts to USD 211.50/MT on CNF India basis, after considering a USEC-India dry bulk freight rate of USD 29.50/MT by Panamax vessel class.

The US high-volatile type A (HVA) coking coal price is assessed at around USD 199.00/MT FOB USEC, based on 7% ash, 0.85% sulfur and 32% volatile matter.

The US high-volatile type B (HVB) coking coal price is assessed at around USD 161.00/MT FOB USEC, based on 8% ash, 0.95% sulfur and 34% volatile matter.