Metallurgical coal price plunge: Where is the support?

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What’s inside this report?

A deep-dive into hard coking coal (HCC) price dynamics.

It is commonly accepted that US$200/t prices for seaborne HCCs are unsustainable. But the market had become accustomed to sky high prices.

After prices plunged to below US$160/t in early August, we explore the obvious question: when will prices stabilise?

We also look at the four main reasons behind the price drop.

Why buy this report?

Get answers to all your questions about HCC prices, including:

  • What can we expect for the rest of the year? And how will the US-China trade dispute affect the market?
  • When do we think prices will recover?
  • What are the key risks to short-term prices?

08 August 2019

Metallurgical coal price plunge: Where is the support?

Report summary

The plunge in premium HCC prices to below US$160/t in early August has caused market participants and observers to sit up and take notice, after the relative stability of early 2019. The metallurgical sector is facing a plethora of negative forces, not least the burgeoning interventions of the Chinese authorities. As spot prices fall to multi-year lows, we look at the reasons behind the plunge, how long it might last, and where short-term prices are likely to find resistance.

Table of contents

    • Four reasons for the price fall
    • 1. Chinese port restrictions
    • 2. Seasonal demand slowdown
    • 3. Improved supply availability
    • 4. Economic reality
    • Where is the price support?
    • What can we expect for the remainder of the year?
    • Supply will come under more pressure in Q4
    • Import activity should also pickup
    • The US-China dispute is a doubled-edged sword

Tables and charts

This report includes 2 images and tables including:

  • Hay Point versus Luilin Price equivalence
  • HCC total cash cost curve 2019 (US$/t FOB), adjusted

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