OREANDA-NEWS. July 05, 2016. Spot metallurgical coal edged higher in the Asia Pacific region July 1 on stronger finished steel prices and perceived scarcity of August cargoes which prompted some traders to take up positions.

Premium hard coking coal was assessed up 75 cents day on day at \\$97.25/mt CFR China July 1, while HCC 64 Mid Vol was assessed steady at \\$93/mt CFR China.

Most participants remained uncertain about the near-term market direction, but the relative strength in Chinese steel prices and perceived shortage of spot hard coking coal cargoes was encouraging trading firms to resume position-taking.

"We are still seeing some demand and there is limited spot availability for our cargoes," an Australian mining source said. "But it's still hard to say where the market is going at the moment."

Analysis continues below...

A Premium Low-Vol CSR 73-75% trade was confirmed done July 1 at \\$98.50/mt CFR China, for a 90,000 mt shipment with end-August laycan. The deal, however, was not fully reflected in the July 1 assessments as the loading window falls out of S&P Global Platts' 7-45 day period.

This was the fourth shipment of this coal brand traded into the Chinese market since June 22.

Three Chinese steelmakers told S&P Global Platts that the transaction price would be slightly lower for a cargo with a closer laycan window. "The market isn't so strong in the near-term... but it might be a little better for later [loading] cargoes."

A second steelmaker, who bought an index-linked, Canadian semi-premium mid-vol shipment, said that he would only consider doing index-based deals as he was confident that prices will drop further. Sources also viewed the modest increase in Chinese steel prices in the last two weeks as a positive push for coking coal prices.

Platts assessed Q235 HRC 5.55mm thick in Shanghai at Yuan 2,570/mt July 1, with 17% VAT, the highest level since June 20, data showed.

Premium low-vol FOB Australia swaps cleared by the Chicago Mercantile Exchange were assessed at \\$94/mt FOB Australia, \\$95/mt FOB Australia and 94/mt FOB Australia for the July, August and September contracts, respectively.

Negotiations were heard ongoing for an on-the-water 50,000 mt cargo of Australian 56-58% CSR and 18-20% VM HCC, with the bid-offer range at \\$86-\\$88/mt CFR China. But this deal wasn't considered in the assessment due to its distressed nature.