Metallurgical coal and coke prices consolidate as weather risks offset demand uncertainty

• • Australian supply disruptions are anchoring coking coal prices at high levels

• • Rising coal costs are pushing metallurgical coke prices higher

Metallurgical coal and coke markets entered a consolidation phase in mid-January after a sharp early-month rally, with prices stabilising at elevated levels as Australian weather disruptions continued to constrain supply. While downstream steel demand signals remain mixed, limited spot availability and logistical risks are preventing any meaningful downside correction.

Premium hard coking coal prices remain firm near $235/t FOB Australia, while low-volatile hard coking coal is trading around $190-195/t FOB, reflecting tight supply of higher-quality material despite some easing in financial contracts.

Australian weather disruptions support prices:

Heavy rainfall and flooding in Queensland have disrupted mining operations and rail movements, particularly into Dalrymple Bay Coal Terminal. These disruptions have reduced loadings from several Bowen Basin mines, tightening spot availability at a time when Indian and Southeast Asian steel mills are beginning to cover February requirements.

The impact has been most visible in second-tier and semi-hard coking coal, where limited prompt availability has reinforced price floors. Even relatively short logistical delays have been sufficient to support spot premiums, given the absence of surplus cargoes during the Australian monsoon season.

Prices pause after early-January rally:

Following the rally since the start of January, metallurgical coal prices have stabilised rather than reversed. The Q1 2026 FOB Australia metallurgical coal financial contract is holding near $239/t, easing only marginally on the week, pointing to consolidation rather than a change in market direction.

Spot physical prices continue to trade at a discount to nearby financial contracts, but the narrowing spread indicates that physical tightness remains a defining feature of the market.

Indonesian metallurgical coke tracks coal higher:

Metallurgical coke prices in Asia are moving higher in tandem with coking coal, with Indonesian material seeing particular support. Top-charged metallurgical coke with CSR around 65 is being offered near $235/t FOB, reflecting rising input costs and firm downstream interest from Southeast Asian mills.

Market sentiment was summed up in a recent WhatsApp message from an Indonesian coke producer, which stated: “Our latest FOB offer for Indonesian top-charged CSR 65 to SEA mills is USD 235, while today’s PLV is already at 237, so the upward momentum should continue.”

The comment highlights the expectation that coke prices will need to rise further to keep pace with coking coal, even though margins remain compressed. On a value-in-use basis, coking coal continues to price above coke, leaving producers with limited buffer against further increases in coal costs.

Demand signals remain uneven:

Demand conditions remain mixed across regions. Indian steel and sponge iron production continues to provide steady support for metallurgical coal imports, while Chinese buying is more selective amid slower economic momentum. In Japan, the quicker-than-expected return of nuclear generation has reduced reliance on coal-fired power and dampened downstream raw material demand.

Despite these headwinds, steelmakers across Asia remain cautious about drawing down inventories aggressively, given ongoing supply-side uncertainty.

Outlook:

We expect prices of metallurgical coal and coke to rise slightly in the near term. While prices may struggle to extend the sharp early-January rally, downside appears limited as long as premium hard coking coal holds above $220/t FOB and Indonesian metallurgical coke remains anchored near $230235/t FOB amid persistent Australian supply risks.