The coking coal market gravitated towards a rangebound-to-slightly-bearish price outlook going into 2025, with some expecting it to extend even into the first quarter, sources said during a recent industry conference held in Prague Nov. 11-14.
Platts Premium Low-Vol (PLV) Hard Coking Coal FOB prices are expected by most surveyed during the conference week to stay rangebound within levels of $190-210/mt. Platts is a part of S&P Global Commodity Insights.
The index has since Sept. 27, been trending relatively within the span of $199-211.25/mt, amid market uncertainties between the US elections and China stimuluses.
Market participants cited limited upside factors ahead into Q1 2025, while downside factors are expected to be capped by higher mining costs, estimated at around $180-200/mt on a FOB basis for Australian PLV coals, including royalties.
“Lots of moving parts and lots of ‘what-ifs’ in the market now,” one US miner said. “Some US mines are talking about cutting productions in 2025 given the state of where export prices are. It’s hard to tell.”
Tariffs and retaliation
“Trump and China, these words are in every of our meetings,” a US miner said. “Asian-based buyers are asking to include terms in contracts to free up obligations in case of another bout of tariff wars. But we are similarly exposed to that. It’s affecting both of us.”
US President-elect Donald Trump, during his campaign in November, pledged to increase US tariffs against imported goods, citing a 60% target on all goods from China. This led to both Western and Asian sources echoing concerns of possible retaliatory tariffs from China, potentially eventually impacting US coking coal flows to China.
China has Jan. 1 reinstated a 3% import tariff on US-origin coking coal, coming after a period of zero provisional duties from May 1, 2022, to Dec. 31, 2023.
Meanwhile, China has also imported 89.3 million mt of coking coal in the first nine months of 2024, 8.0% of which is US origin, making the US the third largest supplier trailing Mongolia (48.6%) and Russia (25.8%), China customs data showed.
Its US volumes for the first nine months have already surpassed its 2023 total of 5.89 million mt by 21%, highlighting the growing uncertainty in the case of retaliatory tariff hikes.
Another US miner however suggested that US tariffs may just be a “Trump card” to encourage China to further open up to US goods to rebalance US trade deficits.
In Europe, a steelmaker source added that such tariffs, particularly against Chinese electric vehicles, were also recently being applied in the EU, sparking concerns on possible tit-for-tat actions from China.
“If we were to continue imposing tariffs against Chinese electric vehicles EVs and goods, and if China retaliates, carmakers here…will be under pressure because China is a key market for them. And this will affect steel demand in the EU,” the source said.
The EU has since Oct. 30 announced tariff increases for EVs made in China, to as high as 45.3%. This follows the US and Canada’s 100% tariffs on Chinese EVs since May.
China’s property sector
Another key issue discussed was the speed of China’s economic recovery, and its ability to alleviate its property crisis.
“China property crisis is weighing down on its steel demand,” a Japanese trader said. “If it’s not solved, we’re expecting to see Chinese steel exports continue, and competing with those from Japan and India.”
While Chinese exports were increasing to highs last seen in 2016, Chinese crude steel production is not however expected by some to see any major reductions soon.
China’s crude steel production dipped 3% on the year to 851 million mt during the first 10 months of 2024, while its steel exports grew 23% to around 92 million mt, according to data from the China Iron and Steel Association.
“Production from the coal and steel industries also contribute to local taxes,” the trader added. “So, there’s production, and there’s bound to be exports.”
Participants said that, without an invigorating recovery plan for China’s property sector, Chinese consumer confidence will remain dampened and hence prolong the country’s lackluster steel demand.
Even though the Chinese government has implemented various measures to support its property sector this year — including easing restrictions on home purchases, lowering down payment requirements, and cutting interest rates — investment in property development declined by 10% on the year during the first 10 months of 2024, and property sales totaled 779.3 million sq m over the same period, down 16%, according to the latest data of National Burau of Statistics.
Russia-Ukraine war, German Elections
“If Trump could end the war, first to make moves will be the banks,” a European steelmaker said. “Once Russian transactions are okayed, coal will flow, likely to Europe first as it’s a natural market prior to the sanctions. And Europe could do with lower raw material costs.”
Likewise in Asia, a trader familiar with Russian coal added that buyers from eastern parts of the region were heard actively inquiring about this possibility.
“It’s just talks for now, everyone is analyzing in preparation just in case the banking system opens up to it again,” the trader said.
Asia-based coal users have been trying since earlier this year to explore alternatives to Russian PCI, citing difficulty in payment methods and the growing scrutiny of raw material origins from their western buyers of steel and coke products.
Another discussed point revolved around Germany’s political future as it moves into its September 2025 elections, with the country’s future stance on energy transition a key issue.
This may subsequently influence EU members on their economies and energy transition directions, sources said.
Apart from its shifting political landscape, Germany’s energy transition, meant to reduce the country’s carbon emissions toward a climate-neutral energy state by 2045, has in recent years faced an uphill struggle amid the energy crisis from the Russian-Ukraine war, and a slowing economy.
“If we want to transition into greener steel production, we need the government to be on board with support, and we have to observe closely on how the German elections unfold,” a European steelmaker added.
India focus
Meanwhile, the market is currently eying India as a bright spot, with new crude steel production capacity in the country.
Tata commissioned in September India’s largest blast furnace (BF) that will bring its crude steel capacity to 8 million mt per annum in Kalinganagar.
Jindal Stainless Ltd. Is planning to launch its 2.2 million mt per annum BF in 2025, while JSW to revamp and upgrade the capacity of its number 3 BF at Vijayanagar by 1.5 million mt per annum.
“Giving freight discounts to east Asia is starting to stick out like a sore thumb for us to compete against Australian coals, our focus hence shifts towards India,” a US miner said. “Freight will be slightly friendlier, and buyers are learning to use US coals in their blends.”