A continued lack of clear spot demand for seaborne coking coal at current levels dragged prices lower Tuesday, in spite of limited spot availability out of Australia.
Platts Premium Low Vol lost $2/mt Tuesday to $323/mt FOB Queensland, Australia, the lowest level since March 1, while HCC 64 Mid Vol lost $1/mt to $300/mt FOB. Peak Downs Region, at $326/mt FOB, was at its lowest level since January 13.
India was still the most likely destination for spot coking coal, some traders and miners said, though selected Chinese mills might also be interested.
But supply remained very tight, and no new firm HCC offers from Australian or Canadian miners were heard Tuesday.
This was largely offset by weak demand at today's prices, and an Indian coke maker with operations in both east and west India commented that coal purchasing these days was typically done on a hand-to-mouth basis.
He added that based on current coke prices of Rupee 22,000/mt ($494/mt) ex-works, he could still break even by buying a coal such as Xstrata's Tahmoor at $340/mt CFR.
This seemed a high price, especially given that offers heard over the past month for small tonnages of this coal at $335/mt CFR West India have failed to attract interest.
In Europe, a trader pegged the transactable value of good US mid-vol single-coal cargoes at around $300/mt FOB US East Coast, and lower-quality blends at closer to 280/mt FOB.
In China, two steelmakers said that current international prices were too high to be of interest. "The seaborne market appears to be on a downtrend," a China-based mining source also said.
While she was not interested, one source said that some mills may be able to afford seaborne prices. Explaining which steel mills would be most likely to import, she cited those in southern China or in the northeast, which are geographically far from Chinese coking coal mines. Another category might be those with captive iron ore mines, she said.
"There are a couple of guys in China who can probably afford to pay $330/mt CFR China [for premium HCC]," a trader at an international trading firm commented.
Also in China, re-export offers were heard for Russian low-vol, low-CSR, low sulfur coking coal at $300/mt CFR India, out of a port's bonded area.
"These re-exports are mostly profit-taking," a trader commented.
Elsewhere in Asia, Japanese and South Korean steelmakers said Tuesday that steel demand from their customers was declining. "There are some cancellations [of steel contracts] taking place," one source said, without specifying the specific industrial sector involved.
A Japanese mill, meanwhile, said that his company's steel production during the April to June would probably be reduced by 100,000-200,000 mt compared to the January-March quarter, because of lower demand from the auto sector in particular.
He added that as a result of this, the company might not need May-loading coking coal from BHP Billiton-Mitsubishi Alliance. In the absence of a new long-term contract for the 2011/2012 fiscal year, BMA has been selling April cargoes to its global customers at a fixed monthly price.
As previously reported, several steelmakers and coke makers, including in Asia, Europe and the southern hemisphere, have confirmed buying BMA April cargoes at a flat price of $330-332/mt FOB for Peak Downs, $328-330/mt for Goonyella, $315-317/mt for Norwich Park, $314-315/mt for Gregory and $300-303/mt for Poitrel.
Finally, talk of spot Mongolian HCC offers in the seaborne market was dismissed by several market participants Tuesday, who said that these were more likely to be offers of trial shipments rather than spot trades per se.
