Atlantic met coal: Alabama deals top week of huge price gains
Prices in the Atlantic met coal market Friday, especially for Alabama coals, were stratospherically higher than last week as the damage to Queensland, Australia’s, main transport arteries by Cyclone Debbie led to severe delays to global shipments.
Spot sales of Alabama coal to Asia were picking up, sources familiar with the business said. New index-linked deals for the best Alabama coals used Platts Premium Low Vol FOB Australia index with a “large premium” on top.
The highest US HCC number for end-April shipment talked about was $290/mt FOB, while premiums to Australian FOB indexes were also said to conclude for new tons.
The Platts Australian Premium Low Vol net forward assessment rose $40.95 to $301.65/mt CFR basis Capesize freight to Rotterdam. Sources said recent inquiry had converted into several Atlantic-focused deals by late Thursday and Friday. A combination of index-linked and fixed pricing was discussed in new deals. Negotiations may be ongoing, and it was said to be too early for some buyers to comment on actual pricing.
The latest deal and prices that surfaced late Thursday and Friday were around a third higher, or closer to double the levels of last week.
Mills in Europe voiced caution, saying it was too early to drop their guard and join Asia in the rush for coal.
Sources said they preferred to bridge any drop in supply from Australia with stocks and wait out for later positions from sources such as the US, Canada and Mozambique, rather than feed the current price frenzy.
“There have been a lot of offers for high-vol B, which suggest they have problems to sell,” a senior industry source said.
Some thermal coal-orientated mines are looking to wash lower-vol material as met coal, with one such supplier holding to price for exports in the next two weeks.
Corsa Coal CEO George Dethlefsen said his company was leveraged around index-based and spot trade for export. “Investors get upset if they can’t get exposure to the spot coal price they are seeing,” he told an industry gathering in New York Friday.
Coke sales have yet to pick up with additional deals since the cyclone, a European supplier said. A mill buyer said buying additional merchant coke would be a second level reaction from the situation, with the primary response to wait it out and draw on alternative coal supplies through existing contracts and channels.
PCI injection is already maximized, one mill source said. Additional pig iron purchasing to make up for any shortfall on a lack of coke, as well as merchant coke supplements, would depend on more complex value-in-use calculations, he said.
So far there are no reports of such remedial measures taking hold, with pig iron export prices in the Black Sea and Baltic already high. Some Q2 blast furnace coke sales were indicated at Eur250/mt ($266/mt) DAF, with the prospect of higher prices for later Q2 cargoes should coal prices remain high.