Metallurgical coal market short-term outlook May 2021 Report

Commodity Market Report 31 May 2021

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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.

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:

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

XLSX 633.08 KB
Metallurgical coal market short-term outlook May 2021

PDF 1.02 MB