A roundup of international coal news from June 4 to June 11.
Asia
China:
The Chinese government told several large steel mills to increase their year-on-year import volumes of U.S. met coals, as part of the country's attempts to narrow its significant trade deficit with the US, sources told S&P Global Platts. Ministry of Commerce officials have approached at least two steelmakers that have previously procured U.S. met coal and instructed them to procure more U.S. exports, sources close to the matter said. The mills were told that their annual imports of met coal cannot fall below volumes imported in 2017. The mills have said that maintaining such volumes would not be a problem.
Hot weather drove spot coal prices for delivery from Australia's Newcastle terminal to $114 per tonne, less than 1% shy of the record high June 4, as demand for the fuel in China, Japan and South Korea increased, Reuters reported June 7. The fossil fuel last reached such levels in early 2012, and Newcastle is now up by almost 130% from the record lows seen in early 2016, the report said. The increase in price was attributed primarily to an uptick of imports from China, Reuters reported, citing traders who said early summer heat waves bolstered the need for electricity.
Uncertainty lingers in the metallurgical coal market as China considers plans to increase U.S. coal imports in order to reduce the significant trade deficits between the two economies, sources said. While this could be a major development for the coking coal sector, market participants said several issues would have to be tackled first. U.S. coal exports to China are taxed at a rate of 3% to 6%, and the U.S. accounts for a small percentage of Chinese coking coal imports.
North China's Hebei province intends to close 22 coal mines this year, phasing out more than 12 million tonnes of coal production capacity, the state-run Xinhua news agency reported. China has been slashing coal and steel production capacities as part of its efforts to tackle air pollution.
Australia
On the back of expectations that iron ore and coal sectors will see volatility in the near term, RBC Capital Markets reviewed its target prices for Australian miners, lifting the target price for BHP Billiton Group to A$30 per share and trimming Rio Tinto to A$76 per share. "Iron ore and coking coal, whilst coming off their early year highs, continue to benefit from supply-side reforms in China, though we expect some level of volatility in the near-term around trade," the analysts wrote in a June 4 note.
S&P Global Platts, like S&P Global Market Intelligence, is owned by S&P Global Inc.
This feature was updated as of 1:53 p.m. ET on June 11. Some external links may require a subscription.
