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Brazilian mining major Vale had fixed a vessel to carry a 70,000 mt (plus/minus 10%) metallurgical coal cargo from Nacala in Mozambique to Port Kembla in Australia loading between July 13 and 15, market sources said Thursday.
According to S&P Global Platts cFlow trade flow software and traders, this would be the first direct shipment of Nacala met coal to Port Kembla.
The import of Mozambique coal is symbolic because Australia is the largest seaborne exporter of met coal in the world, the bulk of which is premium HCCs, prized for its high CSR.
Australia exported 172 million mt of met coal in 2016, according to a Goldman Sachs January 2017 report, or 66% of the seaborne volume, based on the same report. The global seaborne met coal market was estimated at 259 million mt in 2016.
“Steelmakers are looking to diversify their purchases too,” said a ship chartering source with a mining major, adding there have also been iron ore imports into Australia.
“This is an interesting flow,” said a ship-operator source based in Australia. “The vessel will be going from one loading location to another, one from where they can almost for certain find a cargo with very little ballast,” the ship-operator said, adding this could replace some smaller parcels that were shipped from Queensland ports.
It is uncertain if this first shipment of Mozambique met coal is connected to the declaration of force majeure by Australian premium coal met coal producer South32 on Monday.
South32 produces a premium mid-vol coal product called Illawarra in the state of New South Wales, where Port Kembla is located. Other met coal mines located near Port Kembla are Glencore Xstrata’s Tahmoor and Peabody’s Metropolitan mines.
Australian domestic steelmaker Bluescope Steel is a major met coal end-user located near Port Kembla, according to the Port Kembla Coal Terminal official website.
The main met coal products produced by Vale in Mozambique are premium mid-vol and premium low-vol HCCs.
PRICES VOLATILE AMID OUTAGES
The global met coal market has been volatile in the past year due to multiple supply outages in Australia and China.
Spot prices of premium low-vol quadrupled within 2016 — from $76.45/mt on January 4 to $310/mt FOB Australia $310/mt FOB Australia on November 8 of that year — due to the supply outages, Platts data showed.
Prices subsequently doubled in three weeks earlier this year after a cyclone in the Australian state of Queensland, with premium low-vol prices hitting $304/mt FOB Australia on April 17.
Vale said in a recent report the Moatize mines had produced 1.6 million mt of met coal and 802,000 of thermal coal in the first quarter of 2017. Production of met coal was up 62.2% from Q4 2016 and 170.6% higher than a year earlier, and of thermal coal up 38.8% from the previous quarter and up 170% year on year, it added.
In November 2015, Vale sent its first shipment of met coal from Nacala to the west coast of India.(Source: PLATTS)