Anglo American, Posco sign Q3 2012 coking coal deal for $225/mt, up from 7% from Q2
Tuesday, 05 June 2012 | 00:00
Australian metallurgical coal producer Anglo American and South Korean steelmaker Posco Monday signed quarterly contracts for coking coal and PCI coal, including premium low-volatile hard coking coal, for July to September at $225/mt FOB Australia, up 7% from $210/mt FOB in the April to June quarter, and PCI at $162/mt, up 5.7%, several sources reported.
The quarter-on-quarter increase follows supply tightness in the prime hard coking coal market because of strikes at BHP Billiton-Mitsubishi Alliance's Queensland mines over the last two months.
Spokeswoman Jacqui Strambi of Anglo American and spokesman Chung Jae Woong of Posco were unwilling to confirm or comment on the news.
The price of $225/mt applies to Anglo American's flagship German Creek brand, a premium low-volatile HCC, while premium mid-vol HCC Moranbah North was settled at $221/mt FOB, sources said.
Separately, low-vol PCI Foxleigh was signed at $162/mt FOB Australia, up 5.7% from the Q2 settlement of $153.30/mt, while mid-vol PCI Capricorn was agreed at $148/mt, up 9.6% from $135/mt in Q2.
The low-vol PCI price represents 72% of the premium hard coking coal price, down from 73% in Q2 2012. The last five quarterly PCI settlements have been between 72-73% of the premium HCC price.
Given the size of the companies in this market, these deals have the potential to become industry-wide benchmarks for the coming quarter. These would be simpler than last quarter, when an early coking coal deal between Posco and Canada's Teck at $206/mt was not followed by a handful of major Australian miners, who insisted on $210/mt.
The deals are in line with market expectations, as Anglo American had reportedly opened negotiations at $230/mt, while Japanese steelmakers had acknowledged that $220/mt would be acceptable.
The HCC prices are also very close to current spot prices, with Platts Premium Low Vol Friday assessed at $223.50/mt FOB Australia.
German Creek is a premium low-vol HCC with 71% coke strength after reaction, 19.5% volatile matter, 11% total moisture, 9% ash, 0.54% sulfur, 0.06% phosphorus, 100% total dilatation and 250 ddpm maximum fluidity.
Foxleigh PCI is a low-vol PCI with 12.5% volatile matter, 8.4% ash, 7,850 kcal/kg calorific value and a hardgrove grindability index of 77. Most major Australian coking coal miners fix their volumes on an annual basis but bilaterally negotiate prices every quarter.
One exception is BHP Billiton-Mitsubishi Alliance, the world's largest exporter, which prices most of its coking coal monthly.
In June, BMA offered its top HCC brand Peak Downs at $220-223/mt, and its Goonyella premium mid-vol at $216-219/mt.