Metallurgical Coal
HCC Price Surges Amid North Goonyella Force Majeure
November 2018
Positive price movements continued in October, fuelled by supply disruptions caused by the force majeure declared at Peabody’s North Goonyella mine, with spot prices increasing from a low of US$202/t to end the month at US$219/t. Metallurgical coal prices are expected to remain well supported throughout the December Quarter, driven by the continued outage at North Goonyella, port congestion and extended maintenance at Dalrymple Bay and Hay Point, as well as the potential impacts from the impending Queensland wet season.

The October spot price for premium HCC averaged US$217/t FOB Australia, up 9.6% month on month and the first time the monthly average has exceed US$200/t since March. The market reacted strongly to Peabody’s announcement that it expected no December Quarter output from its 2–3Mtpa North Goonyella hard coking coal mine in Queensland as it remedied a fire at the longwall face. Prices surged 5.7% on the 1st of October as a result, with robust demand from China and India supporting additional price growth throughout the month. The price rise was restricted to the hard coking coal market, with the spot price for low-volatile PCI averaging US$130/t in October, up 0.8% month on month.

In the Atlantic market, the spot price for low-volatile HCC FOB East Coast US averaged US$203/t in October, an increase of 9% month on month in response to movements in the Pacific market as well as continued supply restrictions due to the impacts of Hurricane Florence. Supply from the region is expected to be tight for the remainder of 2018, with buyers already aiming to secure contracts for 2019. The October export price for High-Vol A products averaged US$210/t, up 7.1% month on month.

Japanese steel manufacturer JFE Steel settled its December Quarter contract price for semi-soft coking coal at US$130/t FOB Australia, a reduction of 5.1% quarter on quarter. The deal was struck with several Australian suppliers, including Stanmore Coal for its Isaac Plains product. The settlement represents a 3–4% premium to the current spot price, and is around US$9/t less than the December Quarter PCI contract price JFE recently negotiated for Peabody's Coppabella product. With the December Quarter settlement, the semi-soft coking coal contract price has averaged around US$134/t in 2018, an increase of 0.8% year on year.