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The coking coal outlook

Whitehaven

Strong demand will see the price of coking, which is primarily used in steelmaking, rise towards the end of 2023. However, the future is less certain.

Short-term outlook

Fitch Solutions’ industry research body, BMI, said that coking coal prices will remain elevated at $US295 per tonne during 2023.

Tight supply and strong demand from India and Japan will see coking coal prices remain high, with Fitch even saying that the price rally has more room to run. Prices are expected to end the year in the range of $US320-380 per tonne.

According to Fitch, fear of tight coking coal supplies has spurred panic buying as cargo availability remains uncertain amid a post-monsoon demand surge from India, where steel production growth has been red hot. India has a target to produce 300 million tonnes per annum of steel by 2030. The country produced 11.4 million tonnes of crude steel in September 2023, up by 17 per cent year-on-year. Strong infrastructure and construction demand is supporting the domestic steel market in India, as projects are due to be completed ahead of a general election in 2024.

Moving into 2024, prices are expected to average at $USD300 per tonne, as slowing steel production growth in importing nations (except India) will cap coking coal demand, and thus prices. That being said, Fitch does not expect a full price collapse as supply will remain tight globally.

Long-term outlook

In the long term, coking coal prices are expected to decrease in tandem with global blast furnace production growth. There is an expectation that green hydrogen, which is produced without the use of fossil fuels, will play an increasingly vital role in decarbonising steel production. As green hydrogen rises to prominence, reliance on coking coal with drop.

In the EU region, most major steelmakers have initiated hydrogen-based steelmaking pilot projects and research endeavours. Iron giant Fortescue is also developing green hydrogen projects of its own in Australia.

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