The story of coking coal in 2024, especially its price in global markets, has mainly been “one step forward and one step back.” A raw material essential for steel production, coking coal prices have been under pressure in the last half of 2024 due to sluggish growth in global steel output. Like other raw materials, metallurgical coal price trends saw influence from a convergence of factors, primarily fluctuations in global demand and supply dynamics. But what can we learn from 2024? More importantly, what can we predict for 2025?
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Coking Coal’s Wild 2024
Coking coal, also known as metallurgical coal, is a high-grade bituminous coal essential for producing coke, a critical component in steelmaking. Despite its importance, the commodity’s direct association with steel led to significant fluctuations throughout the year.
After hitting a low in January, average coking coal prices rebounded significantly to over US $200 per ton. This upward trend mainly stemmed from increased demand, particularly from markets like India, where steel consumption continues to rise on the back of infrastructure projects.
In August, the global coking coal market faced weak demand in critical parts of the globe as well as oversupply, with occasional upticks driven by batch purchases, resales and fluctuating futures on the Dalian Commodity Exchange. This pattern persisted through September. However, come October, prices rose alongside other raw materials as news of the China stimulus came in.
By the end of Q4 2024 and into Q1 2025, coking coal prices are expected to stabilize and rise to $220-240 per ton. For example, Indian steel company JSW Steel recently stated that it anticipates a recovery in steel prices and reduced coking coal costs in the second half of FY25.
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The China Coal Story
Another major consumer of imported coal, China, tells a different story. China’s role in coking coal pricing is especially pivotal. Thanks largely to its extensive energy needs, the country leads the world in coal importation. In September 2024, for instance, Chinese coal imports surged to new levels. This primarily stemmed from a decline in international prices alongside robust domestic demands from the electricity production sector.
Significantly, despite a weakening economy that reduced general commodity consumption, there were hopes that the Chinese government’s latest round of stimulus efforts could potentially revitalize demand for coking coal, thus exerting upward pressure on prices.
But that surge is yet to happen. In the first 8 months of 2024, coke production in the country was down by 0.4% y/y to 324.78 MT. China’s reliance on seaborne coal imports has also dropped significantly over the past two years, falling by about 20% as the country shifts towards land-borne alternatives.
Australia to Lead a Potential Surge in Exports
Some experts have now forecast that global coking coal exports will increase by about 6% by 2026. The expected growth in exports will primarily come from Australia, and projections state that total global exports from major suppliers will reach 369 MT. According to the latest report by Australia’s Department of Industry, Science, and Resources, as cited by Mysteel, this would represent a significant increase from the 348 MT seen in 2023.
Analysts expect Australian exports to rise by 18.5% compared to 2023, reaching 179 MT in 2026. If realized, this would account for 48.5% of global shipments. The report also indicates that new Australian supplies will likely outpace mine closures and suspensions until 2026.
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The Peabody Deal
Meanwhile, in a new development, major coal producer Peabody recently announced a strategic agreement to acquire coal assets from Anglo American PLC, marking a significant step in its focus on seaborne metallurgical coal.
The $2.32 billion deal, which will likely be completed by mid-2025, includes an upfront payment of $1.695 billion at closing, $625 million in deferred payments over four years, and up to $1 billion in contingent payments tied to favorable future events. Anglo American will also receive $455 million from PT Bukit Makmur Mandiri Utama (BUMA) in a separate transaction involving the Dawson Mine.
The acquisition covers four coking coal mines: Moranbah North, Grosvenor, Aquila, and Capcoal. All of these sites lie in Australia’s Bowen Basin, which is renowned for producing premium steelmaking coal. Around 80% of the output from these mines is hard coking coal, which has an estimated production level of 11.3 million tons for 2026. With an average mine life exceeding 20 years, projections suggest the acquisition is projected to increase Peabody’s metallurgical coal production from 7.4 MT in 2024 to 21-22 MT by 2026.
The India Coal Story
It seems the “real deal” regarding coking coal is happening in India, the world’s second-largest crude steel producer, where analysts say that lower prices for this key raw material will likely benefit India’s construction and infrastructure sectors. Currently, the largest buyers of coking coal from Australia are India and Japan, followed by countries like Germany, Vietnam and Turkey.
Earlier in the current financial year, India’s coking coal imports rose nearly 2% to 29.4 MT. Indeed, India’s reliance on coal for steel making and electricity generation is growing, with calls to reduce reliance on imported coal wherever possible by boosting domestic production. The aim is to strategically maintain imports of non-substitutable coal to support critical industries.
According to Reuters, India’s Steel Authority of India (SAIL) and JSW Steel are also reportedly in discussions with Mongolia to import coking coal. JSW Steel hopes to purchase 2,500 MT, while SAIL is targeting 75,000 MT. As of 2024, India imports about 85% of its coking coal needs.
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