Commodity Market Report

Metallurgical coal market short-term outlook May 2021

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31 May 2021

Metallurgical coal market short-term outlook May 2021

Report summary

The seaborne metallurgical coal market was playing catch-up with the rest of the steel value chain in May, coming off historical highs. The Queensland premium low-vol HCC price jumped on the back of a record arbitrage of well over US$100/t between the CFR China and FOB Hay Point prices. Swap deals allowed EU and Brazilian steel mills to substitute previously purchased US coal with Australian material. Price volatility is set to continue in an illiquid market. We do not forecast Queensland premium low-vol HCC spot prices to stay at current highs moving into the third quarter. A combination of a Q3 monsoon- related dip in demand for India and Chinese government intervention, will soften the current extreme conditions. However, our breakeven price analysis still points towards mid-US$130/t prices through Q4 and into 2022.

Table of contents

  • Coronavirus update: Month ended May
  • Outlook
  • PCI indices not doing market justice
  • China: high commodity prices prompts government action
  • China: steel and coke producers increase operating capacities
  • India: steel production loses momentum, but hot metal remains intact
  • Japan: steel production on the rise
  • Europe: sky-high steel prices and low-cost Aussie coals spur met coal swap deals
  • Brazil: met coal demand solid in spite of Covid prevalence
  • Australia: Queensland’s met coal throughput pickup moving into Q2
  • Australia: Metropolitan resumes production
  • Australia: Kestrel’s output set to recover in H2 2021
  • Australia: Byerwen’s production down, as operations move into new pit
  • US: exports lower in March, but China shipments at a steady pace
  • US: re-started and re-vamped New Elk to ship HV coal to Asia via Mexican port
  • US: Warrior Met Coal plans to meet deliveries during strike
  • Mongolia: slow improvement for met coal exports
  • China: coking coal production set to improve
  • Colombia: met coal and coke exporters paralysed by protests

Tables and charts

This report includes 8 images and tables including:

  • Infection rate versus hot metal production
  • Cost versus spot price (US$)
  • Key prices - history & quarterly forecasts (US$/t nominal)
  • 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)
  • Queensland ports: Metallurgical coal exports (Mt per month)

What's included

This report contains:

  • Document

    Metallurgical coal markets - short-term outlook data - May 2021.xlsx

    XLSX 633.08 KB

  • Document

    Metallurgical coal market short-term outlook May 2021

    PDF 1.02 MB