I have been a bit confused by some of the spot versus contract pricing going in the market for coking coal. It appears I got my quarters mixed up. From ANZ today, there’s clarity, sadly:
Newcastle Sept coal futures fell mildly to USD91.5/t. China’s total coal imports fell 10.3% m/m to 20.2mt in July, but is still 15.3% higher than the same period last year. The main drag was a 40%m/m or 3.2% y/y decline in coking coal imports to 3.92mt. In particular, there was a significant 34% y/y drop in coking coal imports from Australia, but also declines from Russia and the US. According to reports, most major importers cut purchases in July due to soft domestic demand conditions and higher stockpiles – which have also been reflected in the 24% decline in FOB Australia coking coal prices to USD167/t since the beginning of July (as well as steel and iron ore prices). Reports suggest Q4 talks are underway, with some in the market expecting deals to be concluded around the USD170-180/t level.
34% decline year on year?!? Where’s the volumes offsetting price in that. Spot still falling in lock step with iron ore. Contracts to fall 20% in Q4.
Bring on the Chinese stimulus!
