Australian metallurgical coal prices were poised to decline as market concerns on supply related to tropical cyclone and a brewing industrial action have been alleviated. Lighter buying interest also contributed to the downward risk.

 

Tropical cyclone Jasper weakened on December 13. Local media said it has degraded to a low pressure system, with a speed of up to 140 kph crossing the Queensland state. No casualties and infrastructure damages were caused when it crossed over, local media reported.

 

"The cyclone's impact on coal production appears not to be severe as expected," noted an Asian trader.

 

In the past two weeks, market participants had expressed concerns about supplies of Australian metallurgical coal as the actual impacts of Jasper's approach to Queensland were uncertain.

 

Supply fears had been also stoked by potential strike at BHP's coking coal mines in Queensland, including Daunia, Blackwater, Saraji, Goonyella and Peak Downs.

 

About 70-80 supervisors from the five mines were voting on whether to take industrial action, which would close on December 20, sources noted. The potential strike was originally set to be conducted on December 28.

 

However, with no major impacts seen from these factors so far, views on the market direction have diverged.

 

"Port operations in parts of Australia have reportedly been suspended due to weather, which could exacerbate delays to regular contract shipments and prompt end-users to source suitable cargoes in the spot market, boosting prices for quality coal," said a Singapore-based trader.

 

Some steelmakers, however, shrugged off Jasper's impact on supply, saying only some port closures seen so far – which would be soon revoked as the cyclone passes, and no impacts observed on mines yet.

 

They also pointed to tepid demand from South Asia and Japan, leaving some cargoes unsold. "India has diminished purchases as their demand has been largely covered," one of them said.

 

The CCI index showed that as of December 13, Australian main coking coal with medium volatile was $277.5/t FOB, unchanged on the day yet down 0.2% on the month. Main coking coal in scenic coal mine was $335.3/t FOB, unchanged on a daily basis yet up 0.4% week on week.