Prices for Australian coking coal are expected to remain below $200 per ton as the first weeks of 2025 see shifts influenced by both Indian demand and regulatory measures.
Following the introduction of quarterly quotas by the Indian government for low-ash metallurgical coke dating from January 1 to June 30, significant changes have emerged. The quota limit is set at 713,580 tons for each quarter, restricting imports from 11 countries, including Indonesia, which has been one of India’s main suppliers.
The Indian government’s decision has raised concerns among leading steelmakers, including JSW Steel and ArcelorMittal Nippon Steel, as they grapple with the impending limitations. Reports indicate anxiety among stakeholders, as India’s new import policies may contribute to rising internal prices for coking coal.
Despite these developments, the coking coal prices at the beginning of the year are still under pressure due to low domestic prices within China. Analysts note, "Despite improving sentiments due to Indian interest, coking coal prices at the beginning of the year were pressured by the situation in China," according to reporting by Reuters.
Meanwhile, the month of January saw Australian premium coking coal prices drop by 6.8%, closing at $186.25 per ton. Concurrently, prices within China fell approximately 4.6% to $187 per ton, reflecting low demand primarily attributed to internal market conditions.
The coking coal market remained particularly responsive to global influences. A recent escalation from U.S. tariffs on coal might complicate the matter. The tariffs, which were levied after former President Donald Trump announced additional duties on all Chinese imports, stood at 10% for U.S. goods, including coal and liquefied natural gas. China retaliated by imposing tariffs of 15% on American coal and 10% on raw oil.
Clyde Russell, writing for Reuters, explained the significance of these tariffs, stating, "If new tariffs make U.S. metallurgical products uncompetitive, steel producers will need to seek alternatives." This uncertainty is likely to shift some focus back to competitors like Australia and Canada, yet the anticipated demand from China remains tepid.
Still, signs of recovery emerged. The Indian market showcased potential growth with expectations for increase demand for coking coal as they adapt to new regulations. Some market players appear hopeful about the prospects of coking coal being revived by Indian demand.
Looking at the numbers, analysts expect coking coal prices will average around $197 per ton since the start of 2025, but sustained demand from India may drive these prices higher. During the week ending February 7, coking coal quotations showed signs of slight recovery, edging up to $188 per ton from Australia and $186 per ton on the CFR China market.
A key element impacting pricing is the competition between American coking coal already headed to China and Australian produce. The influx of U.S. product, now facing tariffs, complicates the marketplace, inducing additional dynamics where some shipments may not find immediate buyers.
Despite fluctuatingsumptions surrounding global coking coal supply and demand, many analysts contend prices will likely hover under the $200 mark without substantial incentives from China. Futures for coal are, as such, tentative, hinging significantly on external market demands.
Overall, the coking coal outlook for the upcoming months is layered with complexity. From India's strategic regulatory moves to market reactions triggered by geopolitical shifts, only the next few months will reveal if the coking coal market adjusts its sails or remains subject to turbulence.