Coal markets are on watch for the impact of a shocking bridge collapse blocking the Baltimore port
\nJarden says stronger Asian steel spreads linked to lower iron ore and met coal prices will be positive for BlueScope
\nIron ore unlike to dip sustainably below US$100\/t, says CBA<\/p>\n
The collapse of the Francis Scott Key Bridge in Baltimore, which was crashed into by a Singapore flagged container ship, is another reminder that every action has numerous unforeseen effects.<\/p>\n
Immediate concerns are for the six people missing and presumed dead after the early morning tragedy, which saw the sudden collapse of a bridge servicing 30,000 cars a day.<\/p>\n
But it also marked the entry way to one of the largest coal export terminals on the US East Coast.<\/p>\n
Resulting in the deferral of shipments of north and central Appalachian coal including major US producer Arch Resources is another trade disruption after years of them, notably from Covid, wet weather in Australia, fires and rail issues in the Russian logistics network and copper banditry on South African lines.<\/p>\n
According to S&P Global, around 4.3Mt of thermal coal has been moved out of the port up to the end of February.<\/p>\n
But traders, including in Baltimore\u2019s runaway top customer India, are doubtful about any major price impact with the market largely well supplied.<\/p>\n
\u201cFirst only two ports get impacted by this incident one is CSX and CNX. Looking at these two ports I don\u2019t see there is much quantity of coal that will move out from the market. Second point: I have not seen any force majeure from any major supplier like Consol or Javelin or Arch or any other supplier,\u201d a trader told S&P reporters.<\/a><\/p>\n \u00a0<\/p>\n However, it\u2019s worth noting Baltimore\u2019s export grades are pretty bespoke.<\/p>\n The port, which Argus says has a capacity of a little under 31Mtpa, typically shifts high CV coal suited for Asian markets but has a very high sulphur content. Platts specs for Baltimore 6900kcal product come in at 3% sulphur.<\/p>\n Newcastle specs according to S&P Platts come in at 0.75% sulphur and below.<\/p>\n Baltimore\u2019s two terminals loaded around 2.4Mt in February. That\u2019s less than 2% of global coal flows, according to DBX Commodities, but enough that it could affect the broader market.<\/p>\n \u201cTo provide context, Baltimore coal flows represent less than 2% of global flows, but their removal would still impact the market,\u201d DBX head of sales Andreas Christopoulos said in a brief note.<\/p>\n \u201cCounterintuitively, the disruption is expected to have a lesser effect on the Atlantic market and Europe compared to Asia. <\/p>\n \u201cThis is because much of the coal exported from the port has high sulfur content, which is not suitable for European power stations and not relevant for the API2 prices.\u201d<\/p>\n Around 500,000t of coal is currently marooned at port, according to DBX, with a hypothetical one-month closure to lead to 835,000t of lost met coal sales and 1.65Mt of deferred thermal exports.<\/p>\n Argus said April API2 futures rose US$2\/t to US$113.30\/t on Monday, while front month Newcastle thermal coal futures were up US$2.2\/t to US$128.50\/t yesterday morning.<\/p>\n The timing of the disruptions could keep prices from rising stiffly, with coal largely regarded to be entering the shoulder season in the north between winter and summer when electricity use declines.<\/p>\n \u00a0<\/p>\n Scroll or swipe to reveal table. Click headings to sort.<\/em>\n<\/p>\n CODE COMPANY PRICE WEEK RETURN % MONTH RETURN % 6 MONTH RETURN % YEAR RETURN % MARKET CAP NAE New Age Exploration 0.004 0% 0% -33% -20% $ 7,175,595.64 CKA Cokal Ltd 0.115 62% 15% 10% -32% $ 124,079,132.70 BCB Bowen Coal Limited 0.045 -4% -21% -70% -79% $ 127,980,247.41 SVG Savannah Goldfields 0.024 -17% -20% -62% -85% $ 7,308,207.82 GRX Greenx Metals Ltd 0.95 2% -5% 1% 60% $ 259,529,765.65 AKM Aspire Mining Ltd 0.215 16% 19% 144% 284% $ 109,141,951.78 AVM Advance Metals Ltd 0.038 -3% 23% -68% -76% $ 1,523,228.25 YAL Yancoal Aust Ltd 5.23 -4% -8% 1% -3% $ 6,905,898,255.51 NHC New Hope Corporation 4.46 -5% -2% -28% -18% $ 3,677,209,268.40 TIG Tigers Realm Coal 0.0055 10% -8% -8% -58% $ 71,866,863.02 SMR Stanmore Resources 3.15 -2% -5% -14% -8% $ 2,785,300,149.06 WHC Whitehaven Coal 6.74 3% -2% -3% 6% $ 5,513,199,166.56 BRL Bathurst Res Ltd. 0.87 2% 4% -12% -5% $ 166,483,008.60 CRN Coronado Global Res 1.2 -2% -7% -37% -22% $ 1,986,597,670.05 JAL Jameson Resources 0.022 0% -27% -52% -69% $ 9,586,133.08 TER Terracom Ltd 0.23 -13% -12% -48% -59% $ 188,227,065.23 ATU Atrum Coal Ltd 0.004526 0% 0% 0% 0% $ 11,966,853.96 MCM Mc Mining Ltd 0.165 14% 18% 10% -8% $ 67,301,972.76 DBI Dalrymple Bay 2.7 -1% -4% -3% -4% $ 1,338,556,500.90 AQC Auspaccoal Ltd 0.079 -5% 8% -31% -12% $ 40,524,439.69 <\/p>\n WordPress Table Plugin<\/a><\/p>\n \u00a0<\/p>\n Iron ore fell a calamitous 4% on Monday, dropping to around US$104\/t in a slasher flick day for steel-linked metals.<\/p>\n Zinc dropped 2.1% to US$2442\/t, impacted also by news Glencore would restart the McArthur River mine after it was curbed by a cyclone this month, while nickel sunk 1.8% to US$16,640\/t, erasing the gains that had brought short-lived optimism for the struggling commodity.<\/p>\n But falling commodity prices aren\u2019t all bad. Asian hot rolled coil spreads are starting to rebound as iron ore and coal prices normalise, rising from recent lows of US$125\/t to US$156\/t.<\/p>\n That is positive for BlueScope Steel\u2019s Australian operations. <\/p>\n \u201cOur estimates suggest a recovery to US$221\/mt average in Jun-24. This is driven by improved HRC pricing and recent softening in iron ore and coking coal prices (expanding spreads),\u201d Jarden analysts led by Rohan Gallagher said.<\/p>\n \u201cThe average spread for 2H24 HTD is now US$156\/mt, modestly above BSL\u2019s guidance of US$145\/mt (Jarden US$146\/mt).<\/p>\n Pic: Jarden<\/p>\n \u201cAn indicative mark to market, applying spot rates to spread components for the remainder of the half, would see our Australian Steel Products EBIT increase to A$140m (current JARDe $109m). BSL\u2019s previous guidance for Australian Steel Products is to achieve EBIT \u2018less than half\u2019 1H24 (A$258m), implying up to but no more than A$130m in 2H. <\/p>\n \u201cWhilst down meaningfully, the last time we saw spreads this low, Australia was barely breakeven, reflecting the concerted effort on cost management and shift to greater value add across its product range to more stable priced, higher margin Zincalume, Truecore and Colorbond products.\u201d<\/p>\n US steel spreads are up, but present downside risk coming well below BlueScope\u2019s US$510\/t guidance.<\/p>\n \u201cThe 2H mark to market is 2.5% shy of BSL\u2019s guidance (2H US$510\/t),\u201d Jarden says. <\/p>\n \u201cWhilst this could provide possible downside risk, the positive turnaround in spreads should see any risks pare back. Note the typical lag is 1-2 months.\u201d<\/p>\n Jarden has a $24.60 price target on BlueScope (9.1% return on Monday\u2019s closing price) with an overweight rating and a $14 price target (15.3% return) on steel recycler Sims (ASX:SGM)<\/a> but neutral rating.<\/p>\n \u00a0<\/p>\nHow will the tragedy impact supply chains?<\/h2>\n
ASX coal stocks<\/h2>\n
Jarden boosts BlueScope as steel spreads improve<\/h2>\n
BlueScope Steel (ASX:BSL) and Sims (ASX:SGM) share prices today<\/h2>\n\n