Metallurgical Coal
Prices to Steady in August after Strong Correction
August 2018
Abundant supply from Australia, combined with significant import demand declines in China, finally saw spot prices recede below US$200/t in July. India’s buying activity helped prolong high prices for premium HCC throughout June. However, the drop of China’s import volumes, down 19% year on year for the first half of 2018, eventually weighed on prices.

The July spot price for premium HCC averaged US$183/t FOB Australia, down 7.6% month on month, with the price dropping consistently to end July at US$171/t. With the rise in buying activity and persistantly strong prices on the premium thermal coal market providing an elevated base, spot prices for premium HCC are anticipated to be relatively stable in August. The spot price for low-volatile PCI fell sharply in the second half of July, with a series of trades conducted at US$115–120/t. These transactions are unlikely to be representative of market-wide dynamics, with a spot price of US$125–130/t expected to be more reflective.

The spot price of low-volatile PCI averaged US$128/t in July, a fall of 7.3% month on month. The strength of the thermal coal market continued to support semi-soft coking coal prices, with the spot price averaging US$129/t in July, an increase of 0.8% from June.

In the Atlantic market, the spot price for low-volatile HCC FOB East Coast US averaged around US$173/t in July, down 3.4% month on month in response to the price declines on the Asian market. Commencing in early July, China enforced a 25% tariff on US coal imports, making them uncompetitive with other supply regions. Impacts on export volumes are anticipated to be minimal, however, with China accounting for only 5–6% of US metallurgical coal exports in the March Quarter.

The June export price for High-Vol A products averaged US$181/t, down 2.2% month on month. The June Quarter contract index for premium HCC equated to US$196/t, a decline of 17% quarter on quarter amid largely retreating spot prices from March–May.