The outlook for coking (metallurgical) coal prices continues to be bearish due to poor steel production growth and a generally weak sentiment towards commodities priced in the US dollar after the election of US President Donald Trump.
While 2024 worked to cement negative investor sentiment over China’s construction industry, recently announced US import tariffs on steel will further dampen demand for coking coal from the steel sector, which is set to suffer the negative impacts of tariffs and supply chain disruptions, said research agency BMI, a unit of Fitch Solutions.
Currently, Australia’s premium hard-coking coal prices are hovering around $191/tonne. “We expect further pressure in the months ahead. Prices have averaged $197/tonne in the year-to-date, and we continue to expect prices to remain under pressure in 2025,” it said.
Price forecast
Slowing steel production growth in importing nations (except India) will continue to cap coking coal demand, and thus prices in the coming months. BMI has lowered its price forecast for coking coal to $200/tonne from $220 because of plunging prices.
Australia’s Office of the Chief Economist (AOCE) said coking coal prices are expected to average around $205 a tonne. However, they will be subject to high volatility given market illiquidity and the potential for steel trade flows to vary with geopolitical and trade policy changes.
Shanghai Metal Market (SMM) news reported that coking coal inventories increased by 86,000 tonnes last week to 701,000 tonnes. Coking coal inventory at steel mills was 2.743 million tonnes (mt), up 21,000 tonnes (0.8 per cent) week-on-week (w-o-w). Inventories at ports totalled 1.3 mt, up 70,000 tonnes (5.7 per cent ) w-o-w. At plants, stocks were 2.411 mt, down 4.9 per cent from a week ago.
India a sunrise
It said under the influence of (Chinese) year-end downward fluctuations and inventory pressure from some manufacturers, the commodity’s prices have continued to head downwards.
BMI said India’s coking coal imports are at a 10-year high with shipments of 58 mt during FY2024, driven by high demand from steel mills. Most of this growth has benefited Russia and the United States to the detriment of Australian Newcastle coking coal.
The AOCE said increased Indian activity in the spot market presents an upside risk for prices.
The research agency said throughout 2023-2024, Russian coking coal was sold at discounts of 20-25 per cent, while Indian mills also started re-calibrating their furnaces to ensure a better mix of high-ash content coal coming in from Russia.
Russia has successfully displaced countries including Mozambique and Canada to move up as the third largest supplier of coking coal to India.
Poor sentiment
“Strong infrastructure and construction demand is supporting the domestic steel market in India, and will continue to do so throughout 2025,” it said.
The Australian agency said recent price action has been driven by sentiment as opposed to demand from end consumers. Chinese steel production has slowed.
“Weak global steel production and poor sentiment are likely to place a cap on coking coal prices in the near term,” BMI said.
The research agency said in the longer term, it expects coking coal prices to remain on a downward trend, as global blast furnace steel production slows on the back of the transition to a greener economy.