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Prices for top quality Australian coking coal smashed through $US300 a tonne for the first time in five years, as a global shortage overwhelmed the Chinese government attempts to put a lid on the surge.


Coking coal is a crucial ingredient in steelmaking and the soaring prices come despite Chinese steel mill curtailments in the past two months, which have sparked a 41 per cent slump in the price of the other major ingredient in steel , iron ore.


The rally is good news for the Queensland government, which had forecast coking coal to average $US130 a tonne in the year to June 2022 and $US140 in the following year.



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from Glen Dyer



Crisis Forces China to Relent on Aussie Coal



.... There are reports that a desperate [Chinese] government has been forced to raid the Australian coal stranded offshore on a number of ships (There were 70 at one stage earlier this year). The Financial Times and Reuters both confirmed the move on Tuesday in separate reports.


Reuters reported that China is releasing Australian coal from bonded storage, despite a nearly year long unofficial import ban on the fuel, as it scrambles to ease a national power crunch stemming from a coal shortage, traders familiar with the matter said."


And the FT said; China has started unloading a small number of Australian coal shipments despite an unofficial import ban, analysts said, in a move underscoring the intensity of the power crunch facing the world's second largest economy.


An estimated 450,000 tonnes of Australian coal has been unloaded, while the FT said a ship watching service said five vessels with 383,000 tonnes of Australian coal had been brought into berths and unloaded in late September.


While the coal could have been transhipped, the FT and Reuters indicated that was unlikely because Chinese customs had cleared the coal to move into China. So much for Chinese claims of quality problems with the coal, which was one weak excuse advanced in 2020.


Australia shipped 50 million tonnes of coal to China in 2018 and exports had been running at 35 million tonnes and heading for a record in 2020 until the ban was imposed.


That has left a hole in Chinese imports which totalled 198 million tonnes of thermal and coking coal in the January to August period of this year against 220 million tonnes for the same period of 2020 (up to when the ban was slapped on Australian coal).


Since then there have been no imports of either steaming or coking coal (bound for the steel industry). Supplies from China's main supplier, Indonesia have fallen short because of weather and transportation problems while imports from Mongolia have been disrupted from Covid and shipments from Russia have fallen short.


Imports from Canada and the US have also been disrupted at the mine end of the chain while ship shortages have also impacted supplies.

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The squeeze higher in commodity prices was bolstered by reports of foreign companies declining to purchase or ship Russian supplies, including crude oil, and was felt around the world.

The price for top quality Australian coking coal surged above $US500 per tonne, and local thermal coal prices reached $US400 per tonne, both record highs.

Russia is a major exporter of intermediate coking coal for steelmaking and thermal coal for power generation, and the Ukraine crisis and related sanctions on Russia spurred Asian customers to buy any type of coal they could find in expectation of a broader supply shortage.

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