August 2022
The coking coal price has fallen at a much faster than anticipated, while thermal coal price remained above US$/400/t, as falling steel demand from major importing countries, such as China, cause downward pressure on prices.

As this momentum continues, AME expects that the premium HCC spot price will be US$190/t, the semisoft coking coal price will be US$120/t, and the LVPCI spot price will be US$155/t by 2024.

Domestic supply issues are also being resolved, with China’s domestic coking coal output continuing to increase during the year and Mongolian exports ramping up as border restrictions ease. The Russian coal ban is another factor as China and India continue to absorb large volume of cheap Russian imports, limiting the prices in Asia. 

AME forecasts that metallurgical coal consumption will increase as over next two years as the war in Ukraine stabilizes or come to a resolution. AME expects that China will cease its lockdowns. This will drive the growth of metallurgical coal demand, in the short term.

In July, the benchmark price for the Australian premium hard coking coal continued to slip and fell below US$200/t by the end of the month. This is mainly due to the strong supply response from Australia with the restart of Moranbah North and declining steel production.

Unlike thermal coal, new greenfield projects have started to hit the metallurgical coal market. Although these volumes are small, Bowen coking coal has shipped its first coal from the new Bluff coal mine and is expected to ramp up the volume going forward. AME anticipates that these new supplies will continue to put downward pressure on prices.

The premium HCC FOB Australia price averaged US$240/t, down from US$372/t the month prior. The standard HCC price decreased to US$207/t from US$337/t in the previous month. LVPCI averaged US$226/t, down from US$355/t; and semi-soft decreased considerably to US$181/t from US$299/t. US low volatile HCC average price fell to US$265/t from US$365/t and the High Volatile A spot average price fell to US$276/t from US$376/t (down by 20%) in July.

Australian miner South32 is still looking to sell its 50% interest in the Eagle Downs metallurgical coal project in Queensland, Australia. The Eagle Downs project was put on hold in January 2021. The last Feasibility Study discouraged progress as returns were not in line with the capital management framework. South32 has recently reported that the company has not received acceptable offers and is still searching for potential divestment options.