The price of coking coal is at record levels!

The price of metallurgical coal soared to record highs as trade tensions and border issues kept costs for Chinese importers too high.

Despite the decline in iron ore values ​​attributed to Chinese steelmakers complying with a government directive to avoid buying from Australia, coking coal rose.

The value rose to $410 per tonne last week, showing that the price has more than tripled since the start of 2020.

Coking coal surpasses iron ore as the largest input cost for many of the world's steel mills.

Mining analyst Peter Strachan said the rising price seems illogical given the drop in iron ore demand, but logistical problems in Asia are at stake.

"They normally cross the border with Mongolia a lot but the COVID restrictions mean they can't get enough truck drivers to do it," he said.

“Shipping costs have skyrocketed, the Chinese are just struggling and paying more than US$500 per ton for delivered goods. Ex-Newcastle is well over $400, this is a new high.”

With local supplies of metallurgical coal weak, Chinese buyers were competing to procure shipments from as far afield as Asia, North America and ultimately Colombia.

As a result of China's search for new suppliers, major steel producing countries such as India, Taiwan, South Korea, Japan and the EU with limited domestic metallurgical coal are now increasingly turning to Australia.

Jodie Currie, Director of the Bowen Basin Mining Club, said the loss of the Chinese market opened new doors for miners in the region.

“I think it gave them the opportunity to look into other markets, Queensland coal is sought after around the world,” he said.

“There were definitely shock waves sent from the industry but we diversified, we looked at other markets.”