Metallurgical Coal
Premium prices on the up amid Queensland port congestion
December 2017
The November spot price for premium low-volatile HCC averaged US$191/t FOB Australia, up 5% from October, with prices beginning to rebound strongly from the second week of the month amid port congestion at the key HCC exporting terminal of Dalrymple Bay in Queensland, Australia.

This has resulted in the spot price for premium low-volatile HCC exceeding US$200/t for the first time since September. The restricted supply has not significantly impacted the second tier metallurgical coal market, with November average spot prices for semi-soft coking coal and low-volatile PCI averaging US$112/t and US$119/t, down 3% and 2%, respectively, on month.

The December Quarter contract price benchmark has been settled for low-volatile PCI, with South Korean steel producer POSCO and Realm Resources agreeing to a price of US$135/t for the company’s Foxleigh product, around 10% higher than the current spot price. The settlement comes amid reports Peabody settled its December Quarter low-volatile PCI supply contract with JFE Steel for US$127.5/t in September.

In the Atlantic market, the spot price for low-volatile HCC FOB East Coast US averaged US$172/t in November, up 4% from October, responding to supply tightness in the Pacific market on account of the Dalrymple Bay port congestion. Strong growth in steel production globally, combined with solid margins for European steel producers, are continuing to keep Atlantic price movements similar to those of the Pacific market.

Index pricing for premium HCC supply contracts has continued in the December Quarter, with the formula equating to a benchmark price of ~US$192/t FOB Australia, an increase of 13% on quarter. Index pricing for benchmark contracts was first utilised in the June Quarter during a period of price volatility, with the formula an average of three independent premium hard coking coal spot assessments over the prior three-month period (September–November for the December Quarter).