AME is forecasting the average contract price for premium HCC to fall 21% year on year to US$144/t due to the uncertain market prospects affected by coronavirus pandemic in the world. As our expectations are that the market will gradually recover in 2021, AME forecasts the premium HCC contract price to rise to US$150/t. Seaborne metallurgical coal spot prices have dropped dramatically from April due to government measures, such as stay-at-home orders and travel curbs, to control the spread of Covid-19. As economic activity wound down, steel production was affected in all major countries, except China. The Australia Premium Low vol HCC price in May averaged at US$111.2/t FOB Australia, a decrease of 2.5% from the previous month. The spot price for premium hard coking coal gradually rose to US$116/t at the end of June from US$108/t at the beginning of the month as seaborne coking coal prices are still very competitively priced against the higher priced China domestic coking coal for the same grade of premium HCC. The arbitrage is estimated around US50/t. However, China’s tight control over import restrictions put buyers on the sidelines, bringing potential downward pressure on prices.
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