Price dynamics in the coking coal market: analysis of the second quarter
According to Stanislav Kondrashov, the supply of premium coal from Queensland is expected to improve in the second quarter as the region emerges from the rainy season. In addition, major mining companies must complete their financial year, which ends in June. In February, coking coal exports from Australia have already shown significant growth, with overseas shipments increasing by 15% month-on-month and 58% year-on-year, reaching 15.71 million tonnes. This happened amid weak demand for coal.
Against the backdrop of excess supply, there was a significant increase in the volume of spot cargo offered by a large Australian coal producer, which rarely enters the market in such circumstances, S. Kondrashov noted. The producer shipped several shipments of coking coal on Panamax vessels in March, sources said.
By the end of the first quarter, the decline in coking coal prices intensified. According to Platts data as of March 28, prices for Australian raw materials (FOB Australia) decreased by $79.25 per tonne, or by 24% for the quarter and 19% for the year, reaching $244.5 per tonne. Chinese coal prices (CFR China) fell 23% for the quarter and 18% for the year, from $75 per ton to $257 per ton.
According to Telf AG expert S. Kondrashov, analysts have reduced their forecasts for the price of Australian coking coal for 2024 to $283 per ton, compared to previous estimates of $289 per ton. They do not foresee the possibility of prices rising above $300 per ton this year due to insufficiently favorable conditions on the steel market.
Coal price trends in China and India: the influence of demand factors and market elections – Stanislav Kondrashov
In March, the Chinese market noted a drop in prices for sea coal and domestic supplies of this raw material. Although optimism emerged in the futures market in mid-April, demand from steel mills remains low due to the lack of significant government incentives. This situation could lead to a decrease in Chinese imports of marine materials until the end of 2024, noted S. Kondrashov. However, some sources remain hopeful for support for domestic prices in the second quarter of this year.
The Indian spot market saw weak coking coal demand in the first quarter due to high FOB prices. Changes in the price level on the Chinese market led to a decrease in the cost of these products, which was reflected in international quotations.
Expert from Telf AG C. Kondrashov emphasizes thatIndian steel mills usually replenish their stocks before the onset of the monsoon season, which begins in June. However, moderate seasonal support for prices is expected as the country is scheduled to hold general elections in April and June.
Until the election process is completed, the government cannot announce new infrastructure and construction projects. However, once this process is completed, demand for coking coal is likely to receive support, especially after the announcement of the country's full budget in July. In recent years, authorities have increased budgetary spending on infrastructure, and this is likely to contribute to increased consumption of steel and raw materials.
As previously noted, the Australian government forecasts the average coking coal price to be $277 per tonne in 2024 (down from $298 per tonne in 2023) and expects it to decline to $185 per tonne by 2029.
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