Commodity Market Report
Global metallurgical coal short-term outlook October 2020: China displays its power to disrupt
Report summary
China stopped a rebounding metallurgical coal market in its tracks by imposing a ban on Australian imports in early October, just as global blast furnace restarts gained real momentum. The ban erased the US$28/t rise in premium HCC prices we saw in September. The move has precipitated a unique level of disruption to markets. Australian sellers have diverted cargoes at steep discounts, while Chinese buyers have been forced to source scarce premium coals from outside Australia. Prices for non-Australian hard coking coals have risen sharply everywhere. We think the ban will be short-lived, with a new import quota set prior to 2021. Prices should respond once Chinese demand returns, particularly given strong demand elsewhere. Supply is also subdued, as the northern hemisphere winter, and Australian summer look likely to bring more extreme weather than usual. With arbitrage levels into China moving back to over US$60/t, there remains the risk of a sharp increase in prices.
Table of contents
- Coronavirus update: Month ended October
- China’s Australia import ban turns market on its head
- How are Chinese mills responding?
- Price relativities upended
-
Outlook: End of Australian ban will reverse October's dramatic turnaround
- The strict Australian ban is unlikely to persist into early 2021
- Prices will rise when returning Chinese demand combines with global recovery
- Australia: Queensland’s met coal throughput continues to stutter
- Australia:Q3 results show largest miners still some way off their production highs
-
Mines and projects: Progress for some but reality bites for others
- Pembroke’s Olive Downs Complex is given the green light
- While Carabella suspends operations at Bluff
- ...and Peabody idles Shoal Creek mine
- US: producers getting more interest from Chinese mills
- US: domestic business settling
- Mozambique: Moatize’s met coal output up in Q3
- China’s economic performance a source of optimism
- China's 14th 5-year plan and US election are making predictions harder
- India: Steel mills make a strong comeback
- South Korea: Resilience bodes well for metallurgical coal demand
- Japan: Steel sector rebounds slowly
- Europe: Struggling to maintain positive momentum
Tables and charts
This report includes 11 images and tables including:
- Infection rate versus hot metal production
- Cost versus spot price (US$)
- Queensland ports: Metallurgical coal exports (Mt per month)
- Australia met coal production by company (Mt)
- BMA quarterly production (Mt)
- Shoal Creek production and productivity (Mt and t/employee hour)
- Global and Chinese crude steel production (Mt)
- Crude steel production – Ex-China producers (Mt)
- Global and Chinese blast furnace hot metal production (Mt)
- Blast furnace hot metal production – Ex-China producers (Mt)
- Key prices - history & quarterly forecasts (US$/t nominal)
What's included
This report contains:
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