Lack of Indian Demand Sees Coking Coal Prices Weaken: Sources.

Indian demand for HCC imports was Friday further weakened by raw material supply disruptions that could limit domestic steel output, and by the rapidly deteriorating macro-economic environment, sources said.

A decline in bid levels in India, which is still seen as the highest bidder in the seaborne market, contributed to a continued erosion of international metallurgical coal prices.

Both Platts Premium Low Vol and HCC 64 Mid Vol lost $1/mt to $301/mt FOB Australia and $259/mt FOB, respectively. Premium Low Vol was at its lowest point since June 7, and HCC 64 Mid Vol at its lowest since May 27.

For premium coals, an Indian coke maker reported receiving a range of offers for August and September loading, all between $305-315/mt FOB Australia, both from miners and as resales from Indian contract holders.

He said he would consider buying a part-cargo of premium Australia HCC at close to $330/mt CFR, or $303-305/mt FOB after deducting Supramax freight.

He added that for a vessel-load, he would not pay that much.

Resales of coal which is already on the water or at destination ports is not included in Platts HCC assessments.

Another coke maker said that there was little willingness by miners to discuss spot cargoes of premium coals given the upcoming negotiations for October to December.

"The Australians are the only ones not bringing down prices," a source at an Indian steel mill said.

An old cargo of premium Canadian HCC was heard offered into India at $310/mt CFR for 20,000 mt. The coal has been in a Chinese port since January, and has reportedly not been blended.

Handymax freight was estimated at $15-17/mt.

Chinese buying interest for 72-74% CSR low-vol coal could be found in China at $280/mt FOB Australia, as confirmed by one steelmaker. Another mill said he could not consider this much.

The first source added that top quality Chinese coal, such as Liulin #4 was currently priced at Yuan 1,800/mt ($279/mt) free on rail in Shanxi, including 17% VAT, and that rail and ocean freight to his mill would cost another Yuan 80/mt. This meant a CFR equivalent for an imported coal of similar quality of $249/mt, after deducting VAT, Platts calculates.

An Australian blend of two coals put together at a Chinese port was heard offered into India by a trader at $270/mt CFR. The blend has 24-25% VM, 9.5% ash, 0.6-0.7% sulfur and 500 ddpm fluidity.

A trader said that India remained the likely highest bidder, but that this did not mean that there was demand.

"Dropping prices won't help much in India, as physical demand is very limited," he said.

Indian coke makers were worried by the possible shutting down of JSW Steel's largest steel mill due to a shortage of iron ore. This, they feared, could result in some oversupply of coke making its way into the spot market.

The idea that second-tier HCCs is increasingly "a buyer's market" was reinforced by talk of forced sales into China, and anecdotal evidence from buyers of miners inviting bids for such coals.

One cargo of Australian 27.5% VM, 60% CSR HCC was heard trading at a very low $210-220/mt FOB, possibly into China, though this could not be verified, and was not considered in the Platts assessments.

More broadly, several market participants expressed concern regarding the macro-economic situation, as global equities and oil futures fell on the day.

"Things are very dicey, very nervy, very volatile," an Indian buyer said.

"I'm not sure it's a good time to take a position," a trader said.

Source : platts.com