Posted on 21 Mar 2018
Japan’s Nippon Steel and Sumitomo Metal (NSSMC) has agreed a first-quarter 2018 pulverised coal injection (PCI) contract price of $159/t fob Australia with Australia-listed producer Realm Resources. The price is for Foxleigh PCI.
NSSMC has also agreed a first-quarter semi-soft contract price of $150/t fob Australia with Australian private-sector mining firm Bloomfield for Rix’s Creek semi-soft coking coal. But it is unclear if other major semi-soft producers such as Switzerland-based Glencore will follow that settlement.
NSSMC used a three-month average of premium hard coking coal prices indexes from the December-February period as guidance in its first-quarter contract negotiations. Coking coal prices remained above the $200/t level over that period as a result of supply constraints and strong demand, sending first-quarter 2018 prices above fourth-quarter settlements at $135/t for PCI and $126/t for semi-soft coking coal.
The Argus premium hard low-volatile coking coal assessment averaged $236.17/t fob Australia in the December-February period.
But the first-quarter settlement prices agreed by NSSMC are also above current spot prices, which are assessed by Argus at $151.55/t fob Australia for low-volatile PCI and $143.50/t fob Australia for mid-volatile semi-soft coking coal.
“We do not see any reasonable logic to settle for a price at $150 fob. It is true that the index average is about $240 fob, but many people think that the market is in fact easing,” another Japanese steelmaker said. “But at this moment there are no big changes in sight for the way that the quarterly prices are being negotiated.”
Glencore tabled an offer for first-quarter semi-soft contracts to steelmakers in Asia and Europe at $156/t fob Australia. It may have been able to make a deal at that price with Taiwan’s China Steel and potentially other mills, market participants close to the negotiations said.
Rival Japanese steel producer JFE Steel does not use an index average in its bilateral quarterly PCI and semi-soft contract negotiations. It is expected to continue talks for second-quarter contracts this week.
