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Metallurgical Coal: Market tightens as contract talks progress


Metallurgical Coal: Market tightens as contract talks progress

Report summary

Metallurgical coal spot prices have mounted a modest recovery since mid-February, and with Q2 contract talks ongoing, the rise has provided a welcome boost to suppliers' ammunition for the negotiations.  Weather-related supply disruption in both China and Australia is an underlying cause.  And, combined with a stronger-than-usual restocking cycle, low freight rates and an appreciating Aussie dollar, FOB spot prices in Asia have risen above US$80/t in early March, at or close to Q1 2016 contract prices. A roll-over in quarterly prices - US$81/t for LV HCC - is now the most likely outcome, although a modest rise is also a distinct possibility, particularly if negotiations drag on. 

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This Coal Insight report highlights the key issues surrounding this topic, and draws out the implications for those involved.

Participants, suppliers and advisors can use it to look at the trends, risks and issues within the coal industry and gain an alternative point of view when making decisions.

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  • Coal supply has tightened
  • Steel restocking has given apparent demand a larger boost than usual
  • Other factors are also supporting price
  • But, market strengthening may be temporary
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