Coking coal supply may be under threat as union members representing Canadian Pacific Railway staff served a notice to go on strike Tuesday, the company confirmed.
In a notice filed Friday, unions the Teamsters Canada Rail Conference-Train & Engine (TCRC) and the International Brotherhood of Electrical Workers (IBEW) issued a notice to CP of plans to strike Tuesday.
"CP will continue to meet with the TCRC and the IBEW in the hopes of reaching agreements that are in the best interests of the entire CP family, its customers, shareholders and the broader North American economy," the rail company said in a statement.
"CP has commenced its work stoppage contingency plan and will work closely with customers to ensure a smooth, efficient and safe wind down of operations." it said.
Canada is the third largest exporter of coking coal globally, making up 9.8% of global seaborne coking coal exports at 28 million mt in 2017, according to a Goldman Sachs report released in February 2018.
In Canada, Teck -- which uses CP's railways -- is the biggest coking coal miner, exporting premium and hard coking coals to US and Asian markets.
The miner has not yet responded to S&P Global Platts requests for comments.
Coking coal market sources said that the notice ensued after union members had their last contract offer rejected.
This comes at a time when the industry is closely watching issues with Aurizon in Queensland Australia, where the rail company is threatening to cut its railed coal volumes by up to 20 million mt in 2018.
While Asian coking coal buyers said that they are watching the situation with concern, no one is rushing to buy spot yet.
One Asian steelmaker buyer of Canadian coals said that he did not expect a long drawn-out strike, expecting the government to step in in such an event.
He added that he is currently not worried about his coking coal supplies this month as there have been excess cargoes in the market for the May period, but expected that should Canadian coking coal supply be seriously affected, his supply would be tight the following month.
He added that he is still awaiting information from the miner on more details.
Another Northeast Asia steelmaker said the strike in Canada "is a rare case" and it is hard to say if the strike would eventually take place.
He said it was too soon to assess what the impact might be, but added, "It's not the time to rush into [spot] procurement."
