Prices for ex-Australia premium hard coking coal (PHCC) have jumped by $21/mt from the previous trade to as high as $260/mt FOB on July 2, a price last seen in late March this year. The main reason for such a sharp hike was the recent fire at Anglo American’s Grosvenor mine and the expected fall in supply of met coal at least for laycan in August-September.
Late last week, the general mood in the Australian PHCC market was bearish with bids falling to $230-235/mt FOB, versus the previous deal at $239/mt FOB due to ample supply for July shipments after some previous concerns. However, the situation changed drastically after Anglo American’s suspension of production at its Grosvenor met coal mine in Queensland on June 30, following an underground coal gas ignition incident on June 29.
Though overall supply of July shipment material remains the same, buyers have started to worry about the August laycan allocation. As a result, on Monday, July 1, a bid for 40,000 mt of mid-volatile PHCC reached $245/mt FOB for August shipment. Moreover, today bids for September laycan PHCC have been reported at $250/mt FOB, $251.5/mt FOB and $255/mt FOB, all for 75,000 mt of branded coal at GlobalCoal.
The market has finally settled at $260/mt FOB after a deal for 40,000 mt of branded PHCC for August shipment done today.
Also, yesterday, 40,000 mt of ex-Australia South Walker Creek PCI were sold at $195/mt FOB for July 27-August 5, with the price more or less the same as estimations late last week.
“The market seems irrationally bullish. But I am not sure that it will go away very quickly. It could last a while,” a Singapore-based trader said. On the one hand, August-September shipments will be affected as the mine is involved in supply of met coal for such brands like German Creek and Moranbah North and it accounted for almost 30 percent of total coking coal production of Anglo American in the January-June period this year (2.3 million mt out of a total of 8 million mt). However, for the second half of the year, the expected production at Grosvenor mine is forecast at 1.2 million mt “due to a planned longwall move,” a miner said, adding that an update to steelmaking coal production guidance will be provided once more information is available. The total Anglo American output target is 15-17 million mt of coking coal for 2024. There has been no announcement of force majeure by the producer so far.