Platts Reports coking coal prices
According to Platts, "Quarterly contract prices for hard coking coal for January to March 2011 were concluded between BHP Billiton-Mitsubishi-Alliance and a Japanese steelmaker Thursday at $225/mt FOB Australia, 7.7% above the Q4 2010 level of $209/mt FOB, market sources said Thursday....
The $225/mt FOB price would apply to the miner's flagship brands Peak Downs and Saraji. The price, which is in line with recent forecasts, is within $2/mt of the latest reported spot transaction for these brands into China.
Among the other major BMA brands reportedly settled Thursday were second-tier premium hard coking coals Goonyella and Riverside at $221/mt FOB, up from $205/mt in Q4 2010, and hard coking coal Norwich Park at $210/mt FOB, up from $195/mt. Semi-hard coking coal Gregory was heard settled at $205/mt, up from $190/mt.
Among the topics reportedly discussed at the talks were the risk of supply being interrupted by rains in the coming quarter, the narrowing profit margins of steelmakers and technical discussions around the valuation of mid-vol coals.
Similar prices for the first quarter are now expected to be offered to other steelmakers in Asia, Europe and elsewhere.
Coking coal contracts with Japanese steelmakers typically have tonnage fixed annually, and prices negotiated bilaterally every quarter. This is different from iron ore, which is mostly sold in contracts which are linked to spot price indices. Iron ore is the other key raw material used in steelmaking.
The deal appears to put an end to speculation that monthly pricing could be introduced from January. Existing annual fixed tonnage contracts are due to lapse at the end of March 2011, making this a more likely time to switch pricing mechanisms.
Spot coking coal prices have increased gradually since hitting a low point in early August. Platts HCC 64 Mid Vol was at $202.50/mt FOB Australia Wednesday, Premium Low Vol at $219.50/mt and Peak Downs Region at $232.50/mt FOB."