The Salva Report’s Coking Coal Market Summary for the first half of 2013 reports a 15% global increase in seaborne coking coal trade volumes for the first half of the year, citing China’s 28% year-on-year import increase for keeping the market strong.
“The all-important Chinese steel market showed little sign of slowing down in 2013, with H1 steel production up to 389 million tonnes, a year-on-year increase of 33Mt or 9%,” the report says.
Japan and Brazil also started the year with strong demand, with Brazil’s Q2 demand continuing to increase during the second quarter, bucking the global trend.
However, prices have not risen as much as expected because, as is also the case in thermal coal, the market is heavily oversupplied, particularly from Australia.
During the period, Australia’s hard coking coal exports were up almost 6Mt or 13% year-on-year, with semi-soft exports up more than 3.5Mt.
“This was pushed by take-or-pay contracts, a concerted effort by Australian producers to reduce unit prices, and relatively good weather conditions over H1, particularly in Q2,” Salva reported.
The report did not reflect as kindly on North America, with US export growth dropping dramatically during the first half.
“US exporters seem to be finally feeling the pinch of an extended period of weak international prices,” Salva said.
With the US dollar strengthening against competitors such as Australia and Canada, the nation’s export position weakened and caused Q2 exports to fall sharply year-on-year, down around 3.5Mt, Salva said.
“US exporters were opportunistic in 2010-11 when the Australian floods halted production in large parts of Queensland, and they took significant market share gains, but it seems the Australians are finally focused on productivity and are seeing record production levels and the US, as the marginal producer, will lose market share,” the report comments.
Canadian coking coal exports increased by 1.5Mt during the first quarter but did not grow at all during Q2, compared to 2012, and Salva says Australia is to blame.
“A surge in Australian supply in Q2 has halted Canadian growth in its tracks, and pushed aside US exporters,” it said.
Salva said Indian imports were flatter than expected and Mongolian exports to China were down to 6Mt in H1 2013 from 6.8Mt in H1 2012, primarily due to low prices at the Chinese border.
