PLV FOB Australia falls sharply in Q2 on demand rationing
China's ferrous
markets tumble in June despite lockdowns easing
Q3 outlook remains
bearish, with high volatility expected
This report is part of the S&P Global Commodity Insights' Metals Trade Review series,
where we dig through datasets and digest some of the key trends in iron ore,
metallurgical coal, copper, alumina, and steel and scrap. We also explore what
the next few months could bring, from supply and demand shifts, to new
arbitrages, and to quality spread fluctuations.
The price
downtrend that dominated the seaborne metallurgical coal market in the second
quarter looks set to extend into Q3, with construction activity expected to
slow down in both China and India in coming weeks due to the rainy season.
However, prices also have the potential to remain
highly volatile as western countries mull further sanctions on Russia and China
grapples with how to revitalize its economy in the wake of COVID-19 lockdowns.
The benchmark Platts premium low-volatile hard coking
coal price on an FOB Australia basis fell $213/mt quarter on quarter to end Q2
at $302/mt, while the PLV CFR China price fell $46.25/mt over the same period
to $394/mt, S&P Global Commodity Insights data showed, amid increased spot
supply and decreased steel demand.
Falling global steel prices were a key driver of the
sharp fall in seaborne met coal prices in Q2. Hot rolled coil prices in India,
Germany and the US fell 40%, 23% and 20% quarter on quarter respectively in Q2,
S&P Global data showed, while weaker steel prices prompted production cuts
in markets that use Australian coals, including Europe, India and Japan.