Posted on 27 Jul 2022
Australian miner Tigers Realm Coal sees the global steel industry under some pressure, which is weighing on coking coal, coke and iron ore pricing, Kallanish notes.
The firm says now is the first time in several years that iron ore prices are lower than coal prices, and the first time in living memory that Australian coking coal prices are significantly lower than thermal coal prices.
The Asian coking coal market changed significantly in the June quarter, driven by a downturn in the steel market across the board, including China, which was weighed down by Covid lockdowns.
China has been exporting more steel products and eating into the markets of other steel producers, which in turn has placed downward pressure on global steel markets and margins, it adds.
Sharply higher energy prices have led to inflationary pressures and central banks have returned to tightening monetary policy – all of which has had a negative impact on steel demand across multiple sectors, it says.
It also says coking coal prices have halved from over $500/tonne fob Queensland earlier in the year to below $250/t at present. Many met coal producers in Russia and Australia have changed production and processing strategies now to produce thermal coal instead of met coal where possible.
In China, where imported prime hard coking coal is an essential part of large blast furnace coke oven feedstock, prices have held up better – but only for those premium prime HCC grades that cannot be replaced, Tigers Realm points out.
Tigers Realm Coal is a lower-grade met coal producer, with a coking product attracting prices of around $220-230/t cfr China. For such producers, the economics of bypassing the washing plant, increasing product yield and selling thermal coal instead of coking coal looks attractive, considering the relative price of the different products, it adds.
Meanwhile, the firm mined 329,000 tonnes of run-of-mine (ROM) coal and delivered 124,000t to the port in the June quarter.
Overall, 626,000t was mined during the first half-year, which is 63% (243,000t) higher than during H1 2021 and 21% higher than budgeted.
Coal mined increased by 11% compared to the March quarter.
With the launch of the coal preparation plant (CHPP) in April, 189,000t of ROM was delivered to the CHPP and 95,000t of washed coal produced during the June quarter.
The firm’s 2022 sales guidance is estimated at 850,000t to 1 million tonnes.
Source:Kallanish
