Commodity Market Report
Metallurgical coal market short-term outlook March 2022
Report summary
The invasion of Ukraine has transformed energy and mined commodity markets. Russia's importance in the metallurgical coal trade manifested itself in prices reaching eye-watering levels. Premium hard coking coal prices breached US$660/t in mid March, the highest level in the history, and simply unthinkable only weeks ago. Against a backdrop of sanctions, trade finance problems and seaborne logistical constraints, buyers paid a premium of over US$250/t to secure prompt coal from non-Russian sources. These kind of exorbitant risk premiums are always fragile, and prices fell quickly from their peak, but some legacy premium is likely to persist even after the war ends. In this report we assess this legacy, and judge its role in price setting along with broader trends in supply and demand.
Table of contents
- Sanctions and threat of escalation create squeeze on international supplies
- Fundamentals were tight before the invasion
- Despite the ongoing uncertainty, the market has already started to adjust
- Outlook: risk premium and sentiment fades
- China: easing of steel production restrictions short-lived as Covid cases rise
- China: coal demand to bounce back once Covid-related restrictions are lifted
- India: coal imports losing shine
- Japan: looking for options to replace Russian coal, drives prices
- Australia: buyers come knocking on miner's doors for more coal
- Australia: Queensland exports down in February, but expect a rebound in March
- Australia: BHP need a jump in production to meet FY 2022 guidance
- Australia: accident at Moranbah North leads to mine stoppage
- Australia: Sojitz Blue waits on funding for Wilton and Fairhill start
- United States: Russia/Ukraine war will increase trade flows to Europe
- Russia: rail risk the biggest concern for near-term exports
- Canada: rail union lockout ends quickly
Tables and charts
This report includes 12 images and tables including:
- Key prices - history & quarterly forecasts (US$/t nominal)
- Portside imported coking coal inventory
- Hot metal production and met coal imports
- Indian PCI imports
- Global and Chinese crude steel production (Mt)
- Global and Chinese blast furnace hot metal production (Mt)
- Crude steel production - ex-China producers (Mt)
- Blast furnace hot metal production - ex-China producers (Mt)
- Average rainfall across Qld met coal mines
- Worst impacted Qld met coal mines (1 Nov to 21 Mar)
- Queensland ports: Met coal exports (Mt per month)
- BMA and BMC met coal production (100% basis)
What's included
This report contains:
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