Continued increases in premium coking coal spot pricing are leading to second-tier coking coal and mid-tier pulverized coal injection (PCI) grades playing catch up, supporting PCI's move to regain pricing relativity, analysis from S&P Global Platts shows.
Second-tier hard coking coal had narrowed its discount in relative terms to catch up but lost this again in the last few sessions as price surges for Australia FOB premium coals led the market up.
Spot prices for premium HCC from Australia remain elevated on difficulties in securing loading slots in Queensland for contract cargoes, to aid restocking. Indian buyers are said to be exposed to the vessel queue situation. Chinese traders are finding import cargoes more attractive, as domestic coking coal and coke prices rise to promote arbitrage.
TSI Premium HCC FOB Australia rose to $249.60/mt Tuesday, up $38.50/mt since the start of December.
TSI's second-tier HCC on Tuesday was at $178.20/mt FOB Australia, unchanged on a week earlier, with the assessment rising from $167.40/mt at the end of November.
Platts mid-tier PCI has risen to $145.10/mt Tuesday, from $129.30/mt a week earlier, and from $125.35/mt at the end of November.
Commodity price strength indicators, which look at pricing relationships between grades of met coal over varying trading history, are showing premium coking coal remaining stronger over mid-tier HCC and PCI.
This holds true when analyzing the pricing data relativity across various timeframes.
The Platts TSI Met Coal RSI Tracker data analyzed pricing data for the grades over the past 15, 30 and 60 trading days.
The tracker generates daily indexes which are indicators of relative strength and weakness for each coal type compared with peers, against trading history.
TRACKER
In the Australian FOB met coal market as of Tuesday, the tracker showed Premium HCC pricing trended 4.6% above its 30-day average price relationship with second-tier HCC and PCI.
Over 60 days of data, Premium HCC on Tuesday was pricing 8.7% above historic expected value.
Second-tier HCC prices trended at 5.8% below expected value on 30-day trade history, while mid-tier PCI was just below parity to expected value using 30-day trade data with the two coking coal grades.
Platts TSI Met Coal RSI Tracker data showed since November 7, Premium HCC prices have trended with varying positive RSI figures. Second-tier HCC's RSIs recovered from negative figures in earlier December, and since weakened to new lows.
Mid-tier PCI prices had recovered relativity after last week's price rise, from a run of softness since early November.
The price trends on 30-day data, along with measuring the group's RSIs over 60-day durations and short 15-day cycles, show consistently that premium HCC pricing has trended strongly, and beyond historic ranges.
While PCI has swung back with price increases, there may be expectations of further price swings for the group to revert closer to longer-term average relationships.
PCI pricing has clawed back as coke prices in China rose steadily this month, for coke to return closer to highs seen earlier in September.
This may be increasing demand in China for PCI, with traders reporting a pick up in inquiry from the mainland. PCI may also be used as part of the coke blend, replacing some higher priced coking coal, depending on the physical and coking properties.
PCI injection rates in other markets are high and supplies are largely contracted.
This follows a longstanding installation of injection units to minimize coke consumption, along with a variety in PCI origins such as from Russia along with Australia, and fuel substitutes into the blast furnace.
