Quick Perspective: FOB Market Holds 195–200 as Supply Dynamics Take Control

Quick Perspective

Market continues to trade within a 195–200 FOB band, but the drivers have shifted.

Earlier on, support came mainly from firm Chinese PHCC values. However, with DCE softening, arb-based cargoes have turned competitive again — illustrated by the 205 CFR China trade from an arb trader to an end user. As highlighted before, these arb cargoes are limited in volume, and the repeatability of 205 CFR is highly questionable from the seller side.

Today, support for the FOB PHCC market has transitioned to ex-China fundamentals. Position cargoes are increasingly being placed into markets outside China and India. Traders’ branded supply is thinning out, and BHP has already begun offering January loaders, leaving limited December GYC availability in the market. Though, Peabody’s recent deal at 196 FOB came in slightly below expectations, likely due to the earlier-than-preferred laycan of 11-20 Dec.

Looking ahead, the market direction hinges on the supply-side story. If Peabody continues to front-run BHP in offering the forward months, volatility is set to rise, as the market becomes more sensitive to timing and offer sequencing across the miners.