LAUNCESTON, Australia- The price of coking coal has surged to a seven-month high, but the question is whether the rally in the fuel used to make steel is down to an improving economic outlook, or whether supply issues in top exporter Australia are to blame.
The price of Singapore-traded contracts linked to the spot price of Australian coking coal ended at $345.67 a ton on Monday, just below the $348.00 reached on Feb. 3, which was the most since July 1 last year.
The price has jumped 70.3 percent since the 2022 low of $203.00 a ton, reached on Aug. 1 amid concern that the global economy was heading into a recession in the wake of the surge in energy costs sparked by Russia’s invasion of Ukraine on Feb. 24.
Since that low, some optimism has crept back into the market that the global economy will avoid a deep recession, and that China, the world’s largest steel producer, will roar back to life in 2023 after ending its strict zero-COVID policy, which had crimped growth.
Coking coal prices, along with those for iron ore, have rallied on the back of this optimism, with both steel raw materials recording strong gains this year.
Spot benchmark 62 percent iron ore for delivery to north Asia, as assessed by commodity price reporting agency Argus, ended at $124.60 a ton on Monday, down from the almost eight-month high of $129.50 on Jan. 30, but still up 57.7 percent from the 2022 low of $70.00 on Oct. 31.
The question is whether there are any fundamental data to back up the recent gains in prices.
The answer is that for coking coal there appears to be both rising demand and some supply disruptions at work.
Global coking coal imports from the seaborne market rose to 24.84 million tons in January, the highest since July, according to data compiled by commodity analysts Kpler.
India, the top seaborne importer of coking coal, landed 6.06 million tons in January, largely steady from December’s 6.25 million, but up from 4.98 million in January last year.
Japan, the second-biggest buyer of seaborne coking coal, imported 5.01 million tons in January, up from December’s 3.98 million and roughly level with last January’s 5.08 million.
Although China is the world’s biggest coal importer, it buys mainly thermal coal from the seaborne market as it sources the majority of its coking coal from domestic mines and overland from neighboring Mongolia.
Nonetheless, China’s seaborne imports of coking coal rose to 2.54 million tons in January, up from December’s 2.30 million and only slightly below the 2.60 million from January 2022.
Outside of Asia, Europe’s imports of coking coal rose to 3.81 million tons in January from December’s 3.55 million, according to Kpler. – Reuters
