Australian coking coal prices dropped by $10/t d-o-d to $252/t
Decline in Australian coking coal prices can be attributed Weak global steel demand
Australian coking coal prices fell by 25% till date in March 2024. Prices recorded at $252/t on 20 March, 2024 as against $314/t assessed on 1 March. Australian coking coal prices dropped by $10/t d-o-d 20 March. This marks the fifth consecutive day of decline in Australian coking coal prices. According to BigMint data, Australia’s coking coal exports from 1-16 March stood at 5.48 million tonnes (mnt), while coking coal exports in February stood at 14.9 mnt.
The decline in Australian coking coal prices can be attributed to several factors affecting the steel and coal markets. Weak global steel demand, particularly in India and China, has led to decreased demand in spot markets, resulting in an oversupply situation. This oversupply has given end-users increased bargaining power, thereby exerting downward pressure on prices.
In March, China experienced a decline in coking coal and coke production due to weak steel demand and a decrease in pig iron production for the fourth consecutive month. Significant volumes of these raw materials remained unsold at the beginning of last week. Local coke producers have recently implemented the sixth round of price cuts, with expectations of a seventh round in the near term. They are now considering reducing production and maintaining low inventories. Despite falling prices, Australian imports remain relatively expensive for Chinese buyers.
Meanwhile, steel demand in India remains subdued, leading to reduced demand in spot markets. Indian steelmakers have adopted a cautious approach, particularly with the upcoming general elections and the end of the financial year. This cautious stance has contributed to the downward trend in steel prices. Indian buyers are adopting a wait-and-see attitude, anticipating further price declines in coking coal, which traders believe could reignite their buying interest. Weakness in the local coking coal market may persist until the general elections, as steel demand is anticipated to remain low until after the elections in India.
This oversupply and reduced demand from India and China have given end-users increased bargaining power, thereby exerting downward pressure on prices.
Outlook
As two major importers of coking coal, India and China, are expected to play pivotal roles in shaping market dynamics. India’s steel demand is anticipated to remain subdued until after the general elections. Furthermore, China’s reduction in coke prices will continue to influence coking coal deals and prices. The slowdown in China’s economy will further impact this scenario, as reduced steel demand in China will also contribute to the overall decrease in demand for coking coal. All these factors collectively influence coking coal prices.
Source: Bigmint
