Settlement of BHP Mitsubishi Alliance labor unrest has proven to be nemesis for Australian miners. Hitherto tight supply had kept the levels afloat in the background of POSCO Anglo deal at USD 225 per tonne last month.
However HCC coking coal offers have taken a beat at USD 218 per tonne to USD 223 per tonne FOB Gladstone recently. Reportedly discount up to USD 10 per tonne is also being talked about.
Major purchasers from India and China have been reticent owing to monsoon and cheaper availability from domestic and Mongolian sources. However the reticence in the market is not expected to last long as the Indian majors cannot postpone buying for more than a month with inventory levels depleting fast. Meanwhile the US offers have also started hardening with miners becoming fastidious and curtailing production with poor domestic demand.
Spot business too followed the same trajectory drifting south of the quarterly benchmark. Australian producers say they are not willing to sell spot tonnes at these levels.
Indian companies have been quick to grab this opportunity commencing fishing in the market. SAIL has issued a fresh tender for 50kt of low ash metallurgical coking coal while Metals and Minerals Trading Corporation of India (MMTC) issued two tenders for 120kt of coking coal. It can be termed as testing the market before they come up with major requirement.
It is expected that July might be the turning point in coking coal market with buying expected resurge after monsoon and European holidays. Even the Chinese market is expected to pick up in autumn as the mercury drops. Construction activity and demand typically picks up in China in Q3. Host of construction and infrastructural projects will start execution in Q3 and Q4 thereby increasing demand for steel and raw material.