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Australia quarterly coking coal contract with Japan falls 15 pct

September-quarter coking coal price contracts between Australian coal miners and Japanese steel producers were settled at $93 a tonne for premium grades, down 15 percent from the June quarter, according to two people familiar with the negotiations.

The lower settlement price covers about 20 million tonnes of Australian-mined coal for the quarter, and influences coking coal spot prices globally.

It falls at the low end of spot sales priced at $92-$95 by BHP Billiton for delivery in July, and compares with $109.50 in the previous quarter.

"It has been done at $93 a tonne, that is the settlement," Marian Hookham, senior manager for consultancy IHS Coal in Australia told Reuters.

Coking coal prices held above $200 a tonne between September 2010 and September 2012, but have been on a steady downtrend since then due to mounting supply.

"I hoped the recent bounce up in met (coking) spot prices might see a slightly higher settlement but no luck. It will make life tough for the U.S. exporters," a second person closely observing the negotiations said, speaking on condition of anonymity.

Hookham said the price decline could lead to more mines shutting.

"We anticipate closures in the United States to speed up if this price is finalised," she said. "For Australia, there is some insulation from the exchange rate, but certainly some sectors in the industry will be producing at a loss."

The Australian dollar has eased against the U.S. dollar over the past nine months, benefiting Australian-based miners.

BHP, in partnership with Mitsubishi Corp, operates the world biggest coking coal export business from Australia.

U.S-based Peabody Energy this month said it was cutting 1.5 million tonnes of annual coal production from its North Goonyella mine in Australia.

Last year, Vale, Sumitomo and Glencore each idled mines in Australia.

Quarterly benchmark coking coal traded as high as $330 a tonne in mid-2011 after bad weather took much of Australia's supply off the market.

source: http://in.reuters.com