The price of coking coal has soared to record levels because of a trade tensions between China and Australia and border problems that made the logistic costs for Chinese importers sky-high at this time.

Last week, coking coal price increased to $ 410 per tonne, more than tripple more than price from early 2020. The value of coking coal currently overtakes iron ore as the largest input cost for many smelters in the world.

The largest Chinese developer, Evergrande, has seen large financial declines recently and acts as a catalyst for the decline in the value of iron ore. The state of the Chinese developers market, which has been in poor shape recently, is the main stimulator of domestic steel demand. China intends to move to 20, 30 percent of its scrap steel, which will see an increase in metal recycling in the country, China’s coking coal demand may soon reach its peak. Eventually there will be a correction, the Evergrande case will stop the development of steel production in China.

China is trying to balance the deficits by intensifying imports from other directions, such as Mongolia, Asia, North America and even Colombia. Delivery costs have increased drastically, the Chinese pay over $ 500 per ton for the delivered coals.

As China searches for new suppliers, major steel-producing countries with limited domestic metallurgical coal reserves, such as India, Taiwan, South Korea, Japan and the EU, are increasingly turning to Australia.

The situation of tensions with China forces Australia to take new directions of export, which is becoming a force for the development of the mining industry in that region. Australian government forecasts say Queensland’s coal exports will increase by 23 percent by 2025.

 



Author: Małgorzata Wojtaszek-Kalaitzidi
Department of Cokemaking Technologies
mwojtaszek@itpe.pl  |  tel: 4832 621 63 58