This report is part of the S&P Global Platts Metals Trade Review series, where we dig through datasets and digest some of the key trends in iron ore, alumina, steel and scrap, and metallurgical coal. We also explore what the next few months could bring, from supply and demand shifts, to new arbitrages, and to quality spread fluctuations.
The seaborne metallurgical coal market enters 2022 amid persisting weak demand in China after a year of unprecedented volatility in which prices surged to a record high in the third quarter of 2021 before plunging in Q4, with the La Niña weather event and China's post-pandemic steel demand and policy decisions seen as the prominent wild cards in the global market outlook.
Market participants generally anticipate that Q1 will see prices in the FOB markets supported by concerns over La Niña and continued supply tightness outside of China, although some expect China's steel consumption will remain weak through March, capping potential for upside.
Following November rainfall that was the highest in 122 years of records in Australia, the country's Bureau of Meteorology is forecasting a wetter-than-average Q1 across much of eastern Australia. The BOM says a La Niña weather event is underway, increasing the likelihood of floods and cyclones.
Supply tightness largely eased in Q4 2021, especially in China, spurring a price slide from record highs in Q3. Benchmark premium low-volatile hard coking coal prices fell 8% quarter on quarter to end Q4 at $357/mt FOB Australia, while PLV CFR China tumbled 44% to $339.50/mt.