Supply concerns push the market higher
Stability characterized metallurgical coal markets during May, with prices staying flat for much of the month as deals remained elusive. The drop in activity occurred because buyers in China and India for the most part felt comfortably supplied, while suppliers — seeing markets tighten as port delays grew — balked at offering lowering prices. Healthy availability of coal for June delivery contrasts with heightened concerns over Australian supplies for July, and, as they entered June, the price impasse looked to be breaking. Prices moved upward, suggesting that supply concerns were coming to the fore again.
The influence of a restructuring Chinese steel and mining industry continues to underpin strong prices. Steel demand and hot metal production in China and India remains a positive force on coal markets, while isolated limits on coke production in China have paradoxically improved demand for premium coals in Shanxi. Sharp price increases for coke in China — due to the oven closures in Jiangsu and Shandong — have been matched by more modest increases in coking coal prices.
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