Coking coal prices have surged to record levels as trade tensions and border issues push costs to Chinese importers sky-high.
Coking coal spiked despite a slump in iron ore prices following China’s import ban on Australia. The price of coking coal surpassed $410/ton last week, more than three times higher than in the first period of 2020. The price of coking coal has now surpassed iron ore, becoming the biggest input cost for many mills. steel in the world.
Mining analyst Peter Strachan said the increase in coking coal prices while the demand for iron ore fell seems irrational, but in fact the cause lies in transportation.
“Normally, coking coal transport operations have to cross the border from Mongolia. However, due to the restrictions related to the Covid epidemic, they cannot have enough truck drivers to do it,” he said.
Insufficient domestic coking coal supply, Chinese producers have been racing to source shipping from across Asia, North America and as far away as Columbia.
China looking for new sources of supply to replace Australia is an opportunity for major steel producing countries with limited domestic supplies of coking coal such as India, Taiwan, Korea, Japan and the EU to switch sources. to Australia.
Regional Mining Club director Bowen Basin Jodie Currie said the loss of the Chinese market has opened new doors for miners in Australia.
Chinese steelmakers are scrambling to source coke from alternative sources after abandoning Australian sources and facing supply challenges from Mongolia. (Photo: Thomas Peter)
Slippage caused by the real estate market
Concerns about the financial troubles of Evergrande, one of China’s top real estate developers, were seen as a catalyst for the fall in iron ore prices.
With increased domestic metal recycling, demand for coking coal in China could soon peak, said analyst Peter Strachan.
China’s steel output in July and August decreased due to the planned steel production limit. This entails the decline of other polluting industries such as cement.
Concerns remain around the state of China’s property market, a key driver of domestic steel demand.(Reuters)
After iron ore prices tumbled from $230 a tonne in May to as low as $93 a tonne in recent weeks, stability has returned following signs that Evergrande will pay interest on time.
Iron ore prices rebounded above the $100/ton mark in midweek trading.
Supply-side constraints
A recent report by the Queensland Resources Council (QRC) highlighted the shortage of skilled workers in Australia as a major obstacle to mining expansion during COVID-19.
CEO Ian McFarlane described the staffing shortage as a “perfect storm” at a time when the mining industry wants to expand. The Australian government forecasts Queensland’s coal exports will grow by 23% by 2025.
The price of coking coal skyrocketed to $ 410 / ton, 3 times since the beginning of 2020 – Photo 3.
Supply problems in Australia including a shortage of skilled industry workers have worsened in recent months. (AAP: Dan Himbrechts)
Finding and retaining skilled employees became the number one priority in QRC’s latest CEO sentiment survey. Workers in the mining sector here have grown to 85,000, an increase of two-thirds in the past five years.
Ms Currie said the industry has failed to retain skilled workers in the past and is committed to change. “We’ve probably done our own injustice over the years by not investing as much as we promised.”
QRC plans to expand Queensland Institute of Minerals and Energy, to encourage students of mining and related careers in 100 schools by 2023
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